The Securities Authority is planning comprehensive changes in Israel’s underwriting methods.
At the end of last year, the order prohibiting maximum flotation prices expired without a whimper. The order, one of the most notorious in stock market history, took effect in November 1993. It changed the very nature of the underwriting trade and remained valid until December 1996 when it expired by mutual consent of the Ministry of Finance and the Securities Authority. Their goal is to allow the primary market to operate freely, without restrictive orders.
However, the non-renewal is contingent on the market avoiding the problems of 1993. Should they reappear, the authorities will consider renewing the order.
It should be noted that the Securities Authority is conducting a comprehensive review of the underwriting and flotation procedures in Israel, with the intent of changing and improving them.
Non-renewal of the order is apparently the first step in a comprehensive change in Israeli underwriting, the details of which have not yet been revealed.