TASE for Beginners
|Investing on TASE|
|The Importance of TASE Role to the Israeli Economy|
The Tel Aviv Stock Exchange plays an important role in the growth and development of the Israeli economy and serves as a meeting point between companies operating in the isreli market and the public. The TASE leads the Israeli capital market and contributes to the economy and society through advanced trading and clearing infrastructures.
Companies that need to finance their activities for growth and development, turn to the stock exchange and raise capital through IPO's. Investors purchase securities and become partners in the company. The government also raises money on the stock exchange by issuing bonds, which are a kind of loan the public gives to the government, and also by selling shares of privatized government companies. In doing so, the TASE contributes to the growth of the entire economy.
|The TASE - a Fully Computerized and Advanced Trading Arena|
|The Tel Aviv Stock Exchange is a trading arena in which various types of securities are traded - stocks of companies, bonds, warrants, derivatives, ETN's and more. On the stock exchange, securities "exchange hands" between buyers and sellers who agree, just like in any other market, on the price and quantity in each transaction.|
In the past, the transactions were carried out in "Floors", Since 1999 trading systems on TASE are fully computerized, and through them everyone can buy and sell securities by one of the TASE members (banks and brokerage firms) who are authorized to trade on TASE (View TASE member list>)
Trading is anonymous, and done between the members on behalf of their clients.
The TASE Clearing House
also operates on TASE. The Clearing House is a subsidiary of the TASE, and upon end of trading on the TASE, it performs the clearing of the securities, that is, transfers the securities from the sellers' to the buyers account (i.e. the TASE members operating on behalf of their clients), and in return, transfers the payment for the securities from the buyers to the sellers.
|History and Future|
|The TASE was established in 1953 as a private company by its members, banks and brokers' firms, in order to institutionalize trading in securities in Israel.|
In April 2017, the Knesset ratified an amendment of the Securities Law enabling changes to TASE's ownership structure and in September 2017 the District Court ratified the TASE demutualization arrangement, enabling changes to TASE's ownership structure, which turns the TASE into a company of profit, while separating TASE membership from ownership TASE shares.
The Israel Security Authority (ISA) is the direct governmental that supervises its activities. The TASE Clearing House, the Maof Clearing House and the Nominee Company are subsidiaries of the TASE.
|What is the TASE Clearing House?|
The TASE Clearing House is a subsidiary of the Tel Aviv Stock Exchange. The Clearing House provides the following clearing and custody services:
- Clearing transactions in securities traded on the TASE and in the MTS system - a European trading system in which, among other things, government bonds of the State of Israel are traded.
- Clearing transactions executed outside the TASE and transfers to a custodian.
- Clearing of creation and redemptions of mutual find units
- Custody services that include registration of the securities traded on the TASE in the credit of Clearing House members
- Clearing of the rights attached to the securities and to mutual fund units registered to the credit of Clearing House members, including in respect of interest payments, redemption, dividend, etc.
- Clearing of transfer orders of securities traded simultaneously in Israel and the United States through its account at DTCC, which is the central clearing house in the United States that provides clearing and custody services for securities in the United States.
Additional information about the TASE Clearing House >
|What is the Derivatives (Maof) Clearing House?|
|The Derivatives (Maof) Clearing House (futures and financial instruments) performs clearing & settlement of options and futures contracts ("derivatives").. This means the Derivatives Clearing House settles transactions which were executed during the trade, transfer of the securities from sellers to buyers on the one hand and the payment of the monetary consideration from the buyers to the sellers on the other hand. In addition, following the expiration date the Derivatives Clearing House settles the expiring & (monetary) exercise of the derivatives.|
Additional information about the Maof Clearing House >
|What is privatization?|
|The government has companies that it owns. The government can sell part of the control in these companies, by selling securities to the public. The sale of stocks of a government-owned company to the public is called "privatization", meaning the transformation of the company from a government company into a "public" or "traded" company. Privatization is an expression of an economic concept aimed at reducing government involvement in economic life. Since 1990 many government companies in Israel have been privatized on the TASE, including Bank Hapoalim, Bank Leumi, Bezeq, Israel Chemicals, El Al and others.|
|What is traded on the stock exchange?|
Several types of securities, are traded on the stock exchange, with the most common product being stocks. A stock is one type of security that enables the issuing company to raise capital from investors on the stock exchange. In exchange for the money they invest in the stock, investors receive part of the ownership and become partners in the company. As the company increases its operations and profits, investors can benefit from its profits.
The Tel Aviv Stock Exchange is unique in comparison to other stock exchanges, because most of the world's most popular investment instruments, including stocks
, government and corporate bonds
, options and futures
, are traded on it. In other countries trading is split into several exchanges. The concentration of trading in one place optimizes management and operations and enables investors to trade in all products at the same arena.
|How can I invest in the stock exchange?|
Securities traded on the stock exchange can be bought or sold through "TASE members" only (banks and members who are not banks. Connection between the public and TASE members is through investment advisors or portfolio managers (brokers) licensed by the Israel Securities Authority.
An investor wishing to carry out securities transactions is required to open a securities account with one of the TASE members and may trade in several possible ways. Today, it is possible to trade via the internet or cell phone, after receiving appropriate authorization from the TASE member through which the investor trades.
It is important to note that all trading, buy or sell orders must pass through a TASE member, but they are anonymous - and reach TASE computers without the name or any other details of the investor.TASE member list >
|Where can you find market data on the TASE ?|
The TASE operates in complete transparency and information on trading in the various securities can be obtained through the TASE website, data vendors and TASE members.
The TASE website presents a great deal of information about TASE activity, data on current trading in securities – free, with a 20 minute delay, on trading volumes and indices, and includes historical data - that is, information on changes in indices and securities prices at different periods, such as the past week, or since the launch of the index.
2. Data vendors
Market data on the TASE is distributed through the TASE's data vendors, who receive permission to use data from trading systems and publish it in real time on various websites and software, for a fee. Data vendors must meet the highest standards in order to ensure the information is accurate and updated.
3. TASE members
TASE members have websites that present up-to-date information about trading in securities, and enable their clients to transfer buy or sell orders for securities on TASE
|Are there mechanisms to protect investors on the TASE?|
Various mechanisms are deployed to protect the investing public, as stipulated in Legislation and the TASE Rules and Regulations.
Capital Market Regulation
- The TASE operates under a license granted by the Minister of Finance.
- The Israel Securities Authority supervises the fair and proper management of the TASE, as well as the activity of the TASE Clearing House and MAOF (Derivatives) Clearing House.
- The Ministry of Finance supervises financial services corporations, including: insurance companies, pension funds and provident funds
- TASE members that are banks are supervised by the Supervisor of the Banks at the Bank of Israel, as well as by the TASE regarding the issues involving integrity and fairness of trading
- Non-banking member corporations are supervised by the TASE, by its Membership and Supervision Department
Further information on capital market regulation >
TACT trading system
"TACT", TASE's automated trading system, incorporates various investor protection mechanisms. The most prominent of these is the "circuit breaker" mechanism, which halts trading on the equity market in cases of extreme volatility.
TASE Clearing Houses
In order to mitigate counterparty risk, the TASE Clearing House (TASECH) acts as central counter party (CCP) to all transactions. In this manner it takes on itself the risk that one of the parties to a transaction will not meet its commitment.
|What is the Israel Securities Authority?|
The Israel Securities Authority (ISA) is an entity whose purpose is to protect investors and their rights. The ISA supervises the proper management of the TASE's activity and the companies traded on TASE, grants companies that operate on the TASE a permit to publish prospectuses for their securities, regulates the mutual funds sector, grants securities licenses to portfolio managers and investment consultants, etc.
|What are stocks?|
A stock is a type of security that enables the issuing company to raise capital from investors on the stock exchange. Investors become partners in the company, and as the company increases its activity and profits, so investors can benefit from its fruits.
In return for the money they pay for the investment in the stock, the investors receive part of the ownership of the company and thus become partners in it.
With the money the company receives from the public, it can purchase equipment, recruit employees and develop new and existing products, in order to expand its operations. There are companies that distribute dividends - that is, the shareholders participate in their profits by receiving cash, according to the number of shares held by them.Learn more about stocks >
|Why do companies issue stocks on TASE?|
|Listing stocks on the stock exchange is one of the options facing a company that is interested in raising capital to finance its activity and growth, for example, to develop a new product, set up a factory, purchase equipment, recruit employees, etc.|
Another way to raise funds through the stock exchange is by issuing bonds, through which companies and the government can raise money from the public, in a process similar to the one in which we take a loan from the bank.
|How do you invest in stocks?|
|Investment in stocks is through "TASE members" - banks and investment houses that have direct access to the TASE's trading system.|
Investment decisions can be made through investment advisors who have received a special license from the Israel Securities Authority. Their recommendations are based on analyses of the companies and the capital market, as well as the investor's preference: the desired time for investment, the amount of money earmarked for investment, the degree of risk that the investor is prepared to take, and more.
|How does a company start offering its stocks on shares?|
|As part of preparations for the IPO (Initial Public Offering) the company is accompanied by a professional, called an underwriter, who together with the company assesses the company's value, and accordingly how much money it can raise on the stock exchange in exchange for its shares. Thus, it is decided what percentage of all its shares will be offered to the public and what will be the minimum price per share..|
In order for a company to be able to offer shares to investors, it must meet the many requirements specified in the Securities Law. In order for investors to decide whether they should purchase the company's shares and what price should be paid for a share, the company is required to prepare, with the help of the underwriter and the lawyers accompanying the issue, a thick document called a "prospectus" that includes extensive information about the company's operation, financial statements and the objectives of the issue.
|What is a dividend?|
|A dividend is part of the company's profits, which is distributed to its shareholders in exchange for their investment. Some companies regularly distribute a dividend, for example, quarterly or once a year.|
|What is yield?|
|Yield is the profit or loss on the investment. For example, the annual yield for an investor who bought a share for NIS 100 and sold it a year later at NIS 120 is 20%.|
|What are convertible securities?|
Convertible securities are "products" that can be converted into other securities. The conversion is carried out under conditions and at predetermined prices on the issue date. Several types of convertible securities are traded on the TASE, including option warrants and convertible bonds.
There are two main types of convertible securities:
- Warrants: Convertible securities that allow the purchase of a share in two installments - at the time of the purchase and upon its realization (conversion) per share. The option gives the holder the right to purchase a share at a predetermined price published in the company's prospectus ("the exercise price").
- Convertible bonds are, in effect, a bond combined with an option that is convertible into a stock.
| ||Bonds, T-Bills (Makam), Mutual Funds, ETNs and Derivatives|
|What is a bond?|
Bond issuance enables companies and the government to raise capital from the public, in a process that is similar to talking a loan from a bank. The company that issues the bond returns the debt on a predetermined date. The investor that purchases the bond in effect gives a loan to the entity that issues the bond.
The bond is traded on the stock exchange and can be bought and sold without any connection to the repayment date of the "loan". A bond is the primary financial instrument for solid investments. The bond guarantees a predefined yield and the ability to profit from trading in it in the short term in the event that the price rises in the market after the purchase.
Government bonds can also be bought on the TASE - bonds issued by the government in order to increase its revenues, reduce government deficit and improve its services to its citizens. The government is the largest debt issuer on TASE. Learn more about bonds>
|What is a T-Bill (Makam)?|
|The Makam (T-Bill) is a type of government bond issued by the Bank of Israel to the public on behalf the government. Every month a new Makam is issued, with a life span of one year. |
The Makam does not carry out any interest nor is it linked to any instrument. It is traded at a discount on its nominal price. When the Makam holders sell it, they receive one shekel for each bond, and their profit is the difference between the shekel and the price at which they bought the Makam.
|What are mutual funds?|
A mutual fund is an instrument that enables investment in a variety of securities in accordance with a predetermined policy. The fund is managed by a fund management company (fund manager). Mutual funds are not traded on the stock exchange.
|What are ETNs?|
A type of security traded on the stock exchange allows us to invest in several securities
from a certain group, such as one of the indices, in a single simple operation. Thus, we also earn savings on commissions on the purchase of each security separately. There are many types of ETNs - including ETNs on the various indices on the TASE, short certificates, commodity index certificates, certificates on currencies such as dollars and euros, and more.
In accordance with an ordinance from the Ministry of Finance, the process of converting the ETNs (Exchange Traded Notes) into ETFs (Exchange Traded Funds) will be executed in 11 stages. In Each stage a group of ETNs with similar characteristics will turn into ETFs. The first stage took place on October 4, 2018 and the last stage will take place towards the end of 2018.
|What are ETF's?|
The Exchange Traded Fund (ETF) is a financial instrument designed to passively track indices of stocks, bonds or commodities. The ETF invests according to a predetermined index.
The fund does not guarantee index-linked yield, and the investor's return can be higher or lower than the selected index, due to the fund's trading activity and deviations (usually small) in the composition of the fund's assets. The ETF is committed to making its best efforts to monitor the index, and therefore the ETF should yield a similar, but not necessarily identical return to the yield of the index it follows.
An ETF is a hybrid product because it is traded on the stock exchange similarly to any security traded on the stock exchange, and the fund can be purchased or sold through the stock exchange. At the same time, the investor has the option of buying or selling the ETF in a similar manner to open-end mutual funds (which are not traded on the stock exchange).
The ETF is subject to the Joint Investments Trust Law, similarly to mutual funds.
Learn more about ETF's>
|What are derivatives?|
A derivative is a financial instrument (such as a future or option) whose value is derived from and is dependent on the value of an underlying asset. For example, the value of TA-35 index derivatives is based, inter alia, on the value of the index during trading on TASE.
There are two main types of derivatives: options and futures, which allow for the trading parties to hedge against fluctuations in the underlying index. Derivatives are also considered as an alternative investment for the underlying asset.
The TASE derivatives market is highly active, and since 1999 it is fully-automated on TACT (Tel Aviv Continuous Trading).
The MAOF (Derivatives) Clearing House is a subsidiary of the TASE and its board of directors consists of external directors and directors who represent exchange members. It sets the rules and regulations governing the derivatives market.
| ||Indices and Trading on TASE|
TASE develops and calculates a wide variety of indices. An index reflects average price levels of a selected group of securities. The TA-35 index, for example, reflects average prices of TASE's 35 most highly capitalized shares. Index changes reflect average returns to investors from these shares.
All constituent shares in a TASE index must meet the criteria of the "equity indices universe
" and each index has its own specific rules regarding its potential constituent securities.
The Tel-Bond indices
track the average price movements of corporate bonds. Other indices track various groups of securities and are published at the end of the trading day.
On the TASE website, each index has a dedicated "Index Page", which includes the following tabs:
- About the Index
- Index Components (Constituents)
- Index Linked Notes – additional TASE-traded products based on the index (i.e., for which the index serves as underlying asset)
- Charts – from 2000 onwards
- Historical Prices – from 2000 onwards
- Corporate Disclosures – latest filings by index constituents from the MAYA website (Hebrew only)
|How is trading conducted on TASE?|
Although most people imagine trading as conducted between traders shouting at each other, noisy and colorful trading arenas are a part of the past. In fact, the TASE has been operating since 1999 in sophisticated computerized trading systems, based on advanced computer technologies, without physical trading arenas. The trading system is called "TACT" Tel-Aviv Continuous Trading.
TASE members transfer buying and selling orders continuously and in real-time to the "Central Order Book", which is located on the TASE computers using the "TACT" computerized trading system. The system matches the orders and creates transactions. Trading information is published regularly on thousands of monitors on various websites in Israel and abroad, and is accessible through sophisticated distribution systems.
At the close of trading, transactions are cleared at the TASE Clearing House and securities' buyers receive the securities to their accounts and pay for them (and vice versa, for the sellers of the securities). Everything is computerized, anonymous and without human contact.
|What are the trading phases at the TASE?|
|How are security rates calculated?|
|What are the TASE indices and what are they used for?|
|An index is a numerical figure that presents the average price of securities from a particular group. When the index rises, investors in the same group of securities benefit from an increase in the average yield, and when the index falls, those investors will see a decline in yield.|
There are many indices on the TASE that represent various groups of securities, for example:
- The TA-35 index reflects the average price level of the 35 stocks with the highest market capitalization on TASE.
- The TA-125 index reflects the average price level of the 125 shares with the highest market capitalization on TASE.
- The SME-60 index reflects the average price level of the 60 stocks with the highest free float that are not included in the TA-125 index.
- Tel-Bond indices track the average price level of corporate bonds.
Apart from these examples, there are many other indices on the TASE that represent other groups of securities, and the data about them is published at the end of each trading day.
In order to be included in one of the indices, the security must meet the general threshold conditions of the equity indices universe
, but also the specific entry conditions for each index separately.
On the TASE website you can find an "index page" for each of the TASE indices. This page includes the following information:
- Key data.
- About the index.
- Composition of the index.
- ETNs - other products that are traded on the TASE and that are based on this index (that is, the index is their underlying asset).
- Graphs showing changes in the index from 2000 to the present.
- Historical data - from 2000 until today.
- Recent reports from the Maya website (Internet system for TASE member announcements) - for companies that are on the index.
|Can one visit the trading floor?|
TASE trading is fully automated and is carried out over computer networks.
In 1997 the TASE introduced a fully automated trading system called TACT (Tel Aviv Continuous Trading)
. By October 1999, all shares, bonds, T-bills and derivatives have been migrated to the new electronic trading platform, marking a new step in the history of the Tel Aviv Stock Exchange.
|Securities & Derivatives Prices|
Securities prices are quoted in agorot. One agora equals NIS 0.01.
Derivatives (options and futures) prices are quoted in NIS.
|Trading Days and Holidays|
|Additional explanations on how to navigate the TASE website|
|Public inquiries to TASE|
Extensive information on TASE activities can be found on the TASE website.
For an explanation regarding the structure of the website menus, click here.
For a site map, click here.
Inquiries can be submitted:
- Through the "contact us" form, which is classified according to topic.
- Telephone: 076-8160411, on TASE business days.
- Fax: 076-8160309.
- Address: 2 Ahuzat Bayit St. Tel Aviv, 6525216.
Historical data is available for payment through the "contact us" request by selecting "Historical Data"
|For technical support regarding the TASE website, call 076-8160666, on TASE business days.|