- The composition of the new indices will be published on January 26, 2017.
- Trading in the new indices will start on February 9, 2017.
- A proposal to cancel the indices update in December will be discussed by TASE's board
- In order to encourage IPOs, a proposal to ease requirements for new companies will be discussed by TASE's board
Tel Aviv Stock Exchange (TASE) has announced today, that the new indices methodology will be effective starting February 9th, 2017.
Following the preparation, implementation and adoption of market activists and public companies recommendations, the technical arrangements are advancing in full steam ahead, and are expected to be complete by year-end. The launch date has been set taking into account, among other things, foreign investors and local activists needs that prefer to avoid year-end launch, and based on the new index methodology the next semi-annual composition of equity indices will take place in February 17, (the following semi-annual update will take place in August 2017).
In the past year, the detailed rules for the new index methodology have been approved, formulated based on extensive discussions with market activists, institutional investors and public companies.
New Index Methodology - Launch Timetable:
Free Float Rate Record Date - December 31, 2016
All other qualifying conditions for indices Record Date - January 12, 2017
Publication date of indices composition - January 26, 2017
Launch date - February 9, 2017
The weight cap on the TA-35, TA-125 and TA Banks-5 indices will be reduced gradually over a course of approximately six months (the "Transition Period"). Prior to the launch, TASE will publish a full "Milestones Timetable", which will be implemented during the Transition Period.
Cancellation of December 16 Indices Update
This coming December, the indices composition were supposed to be updated according to the current indices rules. Due to the closeness to the launch of the new index methodology, TASE's board will discuss a resolution to cancel the Dec 16 Indices Update. Cancelation of the December 2016 update will be in the best interest of investors, indices trackers and traded companies.
Softening rules for new companies in order to encourage IPOs
TASE board will discuss a proposal to reduce the minimum free float rate in the first two years following an IPO to just 20% to be included in flagship indices. Companies that offered shares on TASE starting January 2014 will also benefit from this easing, being within the first two years following the implementation of the new index methodology. After two years, the free float rate will be 30% for companies included in the indices and 35% for companies not included in the indices, as has been determined for the other companies traded on TASE.
Gradual increase of minimum free float rate for "veteran" shares
The change in the free float rate for "veteran" shares will be implemented gradually over a course of a year:
On December 31, 2016 – 25 % minimum free float rate
On June 30, 2017 - 30 % minimum free float rate
From December 31st, 2017 – free float rate in shares included in the flagship indices will be minimum 30% and free float rate in shares not included in flagship indices will be minimum 35%.
Robby Goldenberg, Senior Vice President, Head of Trading, Derivatives & Indices Department, said: "We consider the new index methodology, which will be implemented in about half a year, a major step, that among other things, will contribute to reducing market concentrations on the indices to the benefit of investors and public companies, and reduce exposure for index trackers, who manage NIS 35 billion in financial instruments based on TASE's equity indices".
