The Tel Aviv Stock Exchange (TASE) management has changed the methodology of indices in order to upgrade them and make them more sophisticated. The improvement has a number of aspects.
First, the TASE has created a pool of shares eligible for inclusion in the main indices, which will be three: the Tel Aviv 25 Index; the Tel Aviv 75 Index (which together form the Tel Aviv 100 Index); and the "Yeter Pool" Index, which will include the remaining eligible shares, and will replace the Mid-Cap 120 Index.
The most important threshold criterion for inclusion in the indices is a public holding of at least 25% of a company, up from the current 20% threshold. Companies with a market cap of at least NIS 1 billion can be included in the pool if the public holding is 20%, but they cannot enter the Tel Aviv 25 Index.
MBT Exchange Traded Funds CEO Lior Kagan said, "This is an important change, because up to now each index had different criteria. Now, a share's eligibility will be unequivocal. This will create an orderly system , unlike the current hodgepodge."
Another revision will result in fewer changes in the make-up of the Tel Aviv 25 Index at each semi-annual update, which will reduce the volatility in the process by toughening the conditions for a share's inclusion. Until now, it was enough for a company to boost its market cap above that of the company in 25th place on the Tel Aviv 25 Index list; now it will have to have a higher market cap than the 20th ranked company.
Published by Globes [online], Israel business news - www.globes-online.com - on June 16, 2010
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