JERUSALEM, March 20 (Reuters) - Israel's parliament on Monday voted to end Israeli banks' control of the Tel Aviv Stock Exchange in a reform aimed at turning it into a for-profit bourse.
The legislation to demutualise Israel's only stock exchange passed its final readings in the Knesset. It states that the banks must sell their TASE shares within five years so each holds no more than 5 percent.
"The structural change ... will turn the exchange into a more competitive, cheaper and more efficient bourse, like advanced ones around the world," said Shmuel Hauser, chairman of the Israel Securities Authority (ISA).
Israel's banks will be limited to holding no more than 35 percent of shares in the demutualised bourse, down from 71 percent, to bring it into line with other exchanges.
The TASE has struggled for years to revive flagging listings and volumes, despite attempts to reform.
The new ownership structure, combined with changes to the oversight of the exchange, will lead to more competition, a cut in trading fees and greater liquidity for the business sector, Finance Minister Moshe Kahlon has said.
Along with more than 200 de-listings over the past decade, TASE volumes have slumped, averaging 1.27 billion shekels ($350.44 million) in 2016, down from 1.45 billion in 2015 and 2 billion a day in 2010.
Under the plan, announced in 2014, member brokerages and Israeli and foreign banks including Citigroup, UBS and HSBC will become shareholders. Most stock exchanges in Western countries have adopted for-profit structures in recent decades.
The new legislation also expands the government's regulatory oversight, with the chairman of the ISA granted the power to veto senior appointments to the bourse and fire senior management.
The TASE began 2017 with a new chief executive, Itai Ben-Zeev. Last month, the TASE revamped its indexes, adding 10 more companies to its blue-chip index. ($1 = 3.6240 shekels) (Writing by Ori Lewis, editing by Steven Scheer, Larry King)