TASE to relax membership criteria

Ittai Ben-Zeev  photo: Tamar Matsafi

TASE CEO Ittai Ben-Zeev: New players will enhance competition and make the TASE more accessible.

The Tel Aviv Stock Exchange (TASE) has published a draft paper for public comment containing "significant changes in the conditions for accepting new members in accordance with the prevailing global standards." Managed by CEO Ittai Ben-Zeev, the TASE, which is trying to rejuvenate its activity, has announced "the removal of barriers and the elimination of the requirement for a minimum number of customers, value of clients' securities portfolios, and minimum number of years of activity."

Ben-Zeev declared, "The TASE is revitalizing the rules to conform to the rest of the world. We are opening the TASE to new players who previously could not have been accepted as members. We are confident that the entry of new players with advanced technologies into the local capital market will enhance competition for investors and make the TASE more useful and accessible for the general public."

At present, the TASE has 23 members (brokers), eight of which are not banks; half of the eight are owned by investment houses. The TASE hopes that new members will join. Several non-bank members have left the TASE in recent years, with the TASE currently striving to recruit its first new member with a retail orientation - the Wobi online insurance agency.

The TASE said that it intended to promote the "entry of additional concerns into the Israeli capital market, including retail brokers." The TASE explained that there are currently several conditions for TASE membership "that constitute a barrier for concerns currently operating in the capital market and wishing to be TASE members." A bank or non-banking concern must have at least 200 clients, and the aggregate securities portfolios of its clients must be at least NIS 262 million (there are exemptions for major international concerns). Furthermore, a non-banking concern is also required to have at least two years of experience in investment advice or portfolio management before being accepted as a TASE member.

The TASE adds that these requirements do not exist on other stock exchanges, and they therefore wish to eliminate them. The trial period for members will also be eliminated; when the TASE board of directors approves an application, the applicant will become a TASE member immediately. The validity of approval by the board will be extended to a year, provided that the conditions in it are fulfilled.

The TASE also intends to expand the type of its members by allowing non-banking concerns with only nostro activity to be members, and to distinguish in its fitness conditions between three types of non-banking concerns: a concern that is only a brokerage (with no nostro activity), a concern that operates as a brokerage and holds its clients' assets, and a concern with only nostro activity.

Call for tax concessions for investors

The TASE links the current move to the law for changing the TASE ownership structure, a law passed by the Knesset in March, to taking ownership away from the TASE members who currently hold its shares. The TASE says, "One of the law's goals is to separate ownership and control of the TASE from the companies on it, and to make the TASE trading more accessible to a larger number of concerns. This separation will bolster competition between those taking part in trading, and will lower the fees that the members charge their clients."

In late April, the TASE published its strategic plan. Ben-Zeev explained at the time how he would bring retail investors from the general public back to TASE trading, through a "new and effective distribution platform for the general public and brokers whose core business is providing direct, cheap and accessible trading services to the general public," and by "changing the TASE membership model in order to increase the number of members, with the new members being oriented towards services for the general public."

The heads of the TASE and the Israel Securities Authority, which supervises the TASE, are currently calling for a change in the structure of capital market taxation, including tax benefits and concessions for investors on the TASE and for companies issuing their shares on it.

Published by Globes [online], Israel Business News - www.globes-online.com - on June 12, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Ittai Ben-Zeev  photo: Tamar Matsafi
Ittai Ben-Zeev photo: Tamar Matsafi
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