TASE proposes Friday trading

Tel Aviv Stock Exchange  credit: Shutterstock
Tel Aviv Stock Exchange credit: Shutterstock

The Tel Aviv Stock Exchange management has issued a call for comment on two proposals for bringing trading more in line with international markets.

The Tel Aviv Stock Exchange (TASE) plans to introduce a trading session on Fridays. At present, the exchange is open from Sunday to Thursday. This morning, it published a call for public comment by June 30 on two alternative possibilities for adding Friday as a trading day. The TASE says that the move will be coordinated with the Israel Securities Authority and the Bank of Israel. If it goes ahead, the TASE will become one of the stock exchanges with the most business days in the world, as, unlike it, most stock exchanges are not open on Sundays.

The two alternatives are a switch to trading from Sunday (starting at 12:00) to Friday, and a switch to trading from Monday to Friday only.

Objections have been raised down the years to opening the TASE for trading on Fridays, but the matter has repeatedly been raised in the TASE management. There are various reasons for the objections, but the main one is that the Israeli working week is not conveniently structured for business activity on Fridays. Among the objectors have been the banks, through which most people carry out transactions on the TASE.

The banks are not alone, however: labor agreements in the economy make it difficult to conduct business activity on Fridays. The TASE has a complicated clearing mechanism that operates after the close of trading, and even a few hours trading on Fridays will mean clearing activity that continues after the beginning of the Jewish sabbath on Friday evening.

The aim of the call for comment is to ascertain the stance of "the market", that is to say TASE customers who use its services to trade in securities, prominent among them the financial institutions. The TASE says that it seeks to remove obstacles for global investors, to become more useful to Israeli companies and local investors, and to boost liquidity.

It says that at present trading ends on Thursday, with extensive overlap with trading hours in Europe but only a few hours overlap with the US. Trading in the US continues on Thursday evening Israel time, and trading overseas resumes on Friday. This means that after the TASE closes on Thursday, there are almost two consecutive days on which business continues internationally.

This gap affects both traders in the local market and investors around the world. According to the TASE, the rest of the world has to develop special trading methods to deal with the unusual trading hours in Tel Aviv.

"As far as global investors are concerned, the lack of trading in Tel Aviv on a Friday is a deterrent, and makes activity in local securities difficult for them," the TASE says. It also makes it difficult to include Israeli securities in global indices.

"Adjusting the trading days of the TASE to the global norm will help in making the local more market more accessible to both active and passive global investors and for international market makers, in a way that could increase volumes and liquidity in the local market. The participation of global investors in the local market is extremely important, both for local companies and for the Israeli economy," the TASE states.

Local investors are exposed to movements on Thursday evening and Friday to which they cannot respond until Sunday. "This is significant from the point of view of gaps on information, difficulty in responding in accordance with events on global markets, and the need for margin money because of the only partial overlap between trading days in Israel and overseas," the TASE says.

The TASE also believes that trading on Friday could assist in the accession of securities traded in Israel to the MSCI Europe Index. "An additional benefit is that local investors will have the flexibility of being able to respond to material market news overseas on Friday. In addition, trading on Fridays will allow an additional day of trading in government bonds on the NTS system," it states.

Changing the trading days on the TASE will require complex preparation by the TASE, by TASE members (the banks and investment houses), and others, such as mutual fund managers and reporting corporations. To deal with the complexity of trading on Fridays, trading on Sunday will begin, if at all, at 12:00, to allow the completion of transactions carried out on Friday and not finished by the time the sabbath begins.

Livnat Mizrahi-Rinsky, CEO of IBI Brokerage, said, "For years, we have supported the opening of trading on Friday in order to make the trading days congruent with those overseas. If the TASE seeks to be part of the European stock market and to encourage foreign investment in Israel, it needs to adopt European practice. If there are moves to add Israel to the MSCI Europe Index, they need to be complete, without trying to keep trading both on Sunday and Friday. The stock exchange members are already active and provide trading services during the hours that international markets operate. The start of the sabbath, particularly in the winter, is something that needs to be taken into account, but it’s solvable."

Published by Globes, Israel business news - en.globes.co.il - on May 16, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Tel Aviv Stock Exchange  credit: Shutterstock
Tel Aviv Stock Exchange credit: Shutterstock
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