ISRAEL: TASE Makes Adjustment to its Ownership Structures

Monday September 11 2017

The demutualization of the Tel Aviv Stock Exchange (TASE) is underway. The Israeli Court has approved TASE’s demutualization under Section 350 of the Companies Law.  In April of this year the Knesset ratified an amendment of the Securities Law enabling changes to TASE’s ownership structure; and at the beginning of August, demutualization received the approval of TASE’s General Meeting.

Under demutualization, TASE’s ownership will be separated from TASE membership. This reform is necessary to enhance competition in the capital market and attract new members from Israel and abroad. It is expected to benefit investors by rendering TASE more prominent and accessible to the public.

Under the demutualization, no single member will hold more than 5% TASE ownership.

As part of the demutualization process, TASE will be entitled to distribute its earnings and even issue shares in public offerings. Accordingly, TASE will join leading stock exchanges worldwide, which clearly distinguish between ownership and membership, enabling them to raise capital, undertake strategic reforms, engage in inter-exchange partnerships, etc.

Anticipating operations under the new ownership structure, two months ago TASE released a proposal for significant changes in new membership requirements.

In keeping with accepted standards abroad, these include the removal of various entry barriers, such as the repeal for minimum number of clients and minimal client portfolio value in favour of minimum operating experience and completion of a trial period. For the press release on this subject, click here.

An additional amendment to the Securities Law will shorten the timetable for obtaining regulatory approval of TASE rules. Accordingly, TASE will be able to respond more expediently to capital market dynamics, while maintaining balance and necessary supervisory safeguards.

Click on the link above for further information.