The board of the Tel Aviv Stock Exchange (TASE) today decided to reduce the public holding requirement - the minimum index adjusted free float rate - for companies listed on its indices to 20% from 25%. The float rate for companies listed on the Mid-Cap 120 Index is already at 20%.
The new criteria will come into effect at the next update of the indices in January 2009, and will be in force for the entire year.
Pessimism has been the dominant mood on the market of late, resulting in a massive sell-off by the public, which forced the TASE management to reconsider its listing criteria for companies' inclusion on the leading indices.
The aim of the lower threshold is to prevent a massive turnover on the Tel Aviv 100 Index. A study by the TASE found that, on the basis of data from the end of October, 21 companies would be relegated from the TASE if the 25% public holding rate was retained. If the float was reduced to 20%, only five companies would be relegated from the index.
TASE management is worried by more than just the turnover on the indices. The continuing sell-off meant that some of the companies that would enter the Tel Aviv 100 Index at the next update are less marketable than the company that would be relegated out of it. As a result, the TASE also decided to lower the minimum shekel value of the public's average holding in Tel Aviv 100 companies by one third, lowering the minimum index adjusted free float market cap to NIS 400 million from NIS 600 million.
Published by Globes [online], Israel business news - www.globes-online.com - on November 13, 2008
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