| TEL AVIV, Sept 21
TEL AVIV, Sept 21 The Tel Aviv Stock Exchange
(TASE) must make significant changes to its structure,
regulations and image or it will run itself out of business, a
senior Nasdaq OMX official said on Wednesday.
The U.S. bourse cooperates closely with TASE on various
issues and earlier this year the two exchanges agreed to create
a private market to support small Israeli growth companies.
While Israel is home to a flourishing start-up sector many
of those companies opt to be sold or ultimately list on New
York's Nasdaq rather than go public in their home market.
TASE, which is struggling with falling trading volumes and a
declining number of listed companies, is in the process of a
demutualisation plan that has already been approved by the
bourse's members and Israel's cabinet.
"They have to move forward quickly and successfully or there
won't be a stock market. I truly, truly believe that," Meyer
Frucher, vice chairman of Nasdaq OMX, told a conference at Ono
Academic College in Israel.
He said the Israeli exchange needs to open itself to new
ideas and to "trade everything".
The demutualisation plan, which still needs parliament's
approval, aims for TASE to be more competitive, enable it to
cooperate with foreign exchanges and end Israeli banks' control
over the exchange.
TASE has also agreed to deploy Nasdaq's Genium INET
technology for trading in equities, derivatives, bonds, fixed
income and commodities.
Many companies have complained that new regulations since
the 2008 financial crisis keep them from listing on TASE.
"Whether it's true or not there is a perception of
over-regulation. But it doesn't matter because it's a barrier,"
Under the demutualisation plan, announced in 2014, member
brokerages and Israeli and foreign banks including Citicorp, UBS
and HSBC would become shareholders. It would also separate
between ownership and companies on the bourse.
Trading volumes this year have averaged 1.25 billion shekels
($331 million) a day, down from 1.45 billion in 2015 and 2
billion in 2010. The number of companies listed on the bourse
has dropped by 200 over the past decade to 454 while there are
very few public share offerings.
Rather than raise money on TASE, many high-tech companies
have been sold to large foreign ones, which has led to a steep
drop in Israel's intellectual property.
Shmuel Hauser, head of Israel's securities regulator,
admitted the stock market was "in a battle of to be or not to
"It is clear to all of us that if we don't change the
negative dynamics of the stock exchange, the situation could
worsen," he told the conference.
Recently approved measures that provide incentives to
smaller companies and tech firms, such as tax benefits, being
able to report in English and eliminating quarterly reports for
smaller firms, may change the dynamic, while cutting trading
fees should also bring boost trading, he said.
($1 = 3.7757 shekels)
(Editing by Susan Fenton)