Ben-Zeev added: “The action plan includes operational measures which are implementable in the relatively short term, and which, in large part are based on TASE’s existing internal capabilities and strengths; so that we will be able to see results in the foreseeable future”.
The strategic plan incorporates three major goals through which TASE aspires to reclaim its position as a dominant force in Israel’s economy and to become the first choice for companies, investors and the public at large in Israel: restoration of TASE as the main arena for capital raising, expansion of the Array of services TASE provides and enhancement of market liquidity.
Key measures for achieving these goals are outlined below:
- Central channel for capital-raising – among the measures: “repatriation “ of Israeli companies – currently some 90 Israeli companies are listed abroad for a total market cap exceeding NIS 250 billion, privatization of government companies based on 15 such companies with a potential combined offering market cap of NIS 15 billion. It is believed at TASE that the local capital market is the most efficient platform on which to transfer assets from the government to the public. In addition, an emphasis will be placed on fulfilling the potential of Israeli growth companies, which include 1,000 small and medium-size “traditional” enterprises (SMEs), hundreds of real estate and infrastructure development projects and 300-500 technology growth companies.
- Expansion of the Array of services and introduction of additional products for TASE customers. This is designed to enable TASE to offer better and more comprehensive services to its customers and to increase competition in areas in which it is not already active to enhance capital market efficiency. Key measures in this area include the provision of custodial services for institutional investors, creation of a central securities lending pool, trading in securitized financial instruments and the introduction of an innovative digital registration service for companies.
- Enhancement of market liquidity – High liquidity is a vital part of a well-functioning capital market and is a key element in attracting for attracting larger numbers of local and foreign investors. Market liquidity is affected by three central flows: retail customers, i.e. the general public, traders, and local and foreign institutional investors, all of which TASE aspires to cater.
The Israeli public is currently only a partial partner in the Business success stories of Israeli companies. The share of public participation in trading is extremely low relative to that commonly found worldwide, and this has a direct negative impact on the trading volume and market liquidity.
TASE intends to significantly broaden the scope of capital market participants through a new and efficient public distribution, which will allow digital participation in issues. TASE is already working towards increasing the number of TASE members by extending membership to local and foreign institutions capable of providing direct, inexpensive and accessible financial services to the public and of operating according to a non-advisory brokerage business model.
As background to the strategic program, Ben-Zeev outlined the intense local and global competition TASE faces: in recent years, there has been a significant decrease in the number of investors in the local market (from over 250 thousand investors in 2011 to less than 160 thousand in 2016) and a reduction in foreign investor activity. At the same time, convenient alternatives for capital raising are available through the local private sector; and exposure to and activity in international markets provide ample opportunities for Israeli companies to raise capital abroad, rendering ever-increasing competition for TASE vís a vís foreign securities exchanges in North America, Europe and Asia.
Today TASE revealed that direct annual savings to companies, investors and the government from activity on TASE (raising debt and equity capital and handling securities investments) is estimated at NIS 12 billion. These savings derive primarily from the reduction of business sector financing costs for debt and equity, savings in the cost of public debt, savings in currency conversion fees inherent in the alternative of investing abroad and savings derived from the lower costs relative to financial investments in markets overseas. These savings constitute a direct contribution to growth and employment and to the ability of companies to undertake additional projects and ventures.
TASE has significant internal strengths, which will facilitate the implementation of the planned measures already in the coming months. These include an active and liquid bond market, an easy and accessible dual-listing system, mutual fund clearing and settlement operations, one-stop securities trading and clearing services and a stable operations and technology infrastructure. Moreover, TASE operates in an environment of tremendous potential, which incorporates substantial advantages characteristic of the local market: a stable and growing economy, a developed market and a fervent start-up community, which comprises the base for cultivating leading technology companies.