Dual listing is an arrangement that enables companies listed on foreign stock exchanges to also be listed on the Tel Aviv Stock Exchange (TASE) on the basis of their reports in compliance with the foreign law that applies to them. This arrangement, which has already existed for 20 years, was originally designed to attract Israeli companies listed on Wall Street to have themselves simultaneously listed on the TASE. The arrangement is now broader than it was initially, and will further expand in the future.
Actually, the Israel Securities Authority regards dual listing as one of its main growth engines for developing the capital market in Israel. A number of measures taken in recent years or taking place now are slated to extend the incidence of dual listing. The aim is to increase the dwindling trading turnovers on the TASE. In 2019, the average daily turnover on the TASE was NIS 1.28 billion, 10% less than the daily average in the two preceding years.
For the local capital market, the number of stock exchanges relevant to dual listing has grown in recent years. Among other things, a reciprocal dual listing agreement was signed for the first time, in which local companies can be listed on the Singapore Stock exchange and report according to Israeli law, and foreign REIT funds were allowed to be dual-listed on the TASE.
As of now, there are 56 dual-listed companies on the TASE, half of which are included in the Tel Aviv 125 Index. These dual-listed companies account for 30% of trading turnover on the TASE, showing their importance for the local stock exchange. 40% of the trading in those shares takes place on the TASE.
How to bring foreign companies
Sources inform "Globes" that the Securities Authority is now considering a new possibility - dual listing in Israel of bonds. This means that companies with bonds listed on certain stock exchanges will be able to list the bonds for trading on the TASE and report according to the law applying to them on the foreign stock exchange. Such a step has interesting potential for increasing the number of companies traded on the TASE.
"At a time of global change, dual listing is one of the capital market's main growth engines," says Adv. Ron Klein, director of business development in the Security Authority's international department. Klein says that this is one of the measures aimed at making the Israeli capital market more global, in addition to measures such as promoting a standard for financial statements, putting Israeli companies on international indices, etc.
Klein mentions that dual listing began in 2000 with the New York Stock Exchange and Nasdaq, joined by the London Stock Exchange in 2005. "This was followed by 13 years of stagnations, after which the Toronto, Singapore, and Hong Kong Stock Exchanges were added," Klein says. Nevertheless, although the option for companies to be dual-listed on the Toronto, Hong Kong, and Singapore Stock Exchanges has been available for over a year, no companies have exercised this option yet. The Securities Authority is not worried, saying that it takes time for the news to sink in. There are now companies in the pipeline interested in and considering this option, and it is believed that we will start to see it happen in the coming months.
Published by Globes, Israel business news - en.globes.co.il - on January 30, 2020
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