Market making is a mechanism designed to provide liquidity for securities, in order to facilitate buying and selling by investors, in accordance with TASE rules. Market makers operate under the existing
Tel-Aviv Continuous Trading (TACT) system rules, with no priority whatsoever over other investors in terms of trading or information, as in most European markets. Studies conducted abroad and in Israel indicate that increased liquidity of securities increases their value.
Market making is the introduction of buy and sell orders (quotes) into the order book subject to maximum spread and a minimum amount authorized / permitted, throughout all trading hours on TASE. Market makers’ activity allows other investors to buy or sell securities relatively easily, in the confidence that in the future, when they wish to realize their investment, the market will be able to absorb the supply or demand that they generate.
The activity of the market makers is based on the recommendations of the 'Hauser Committee', which was appointed by the Chairman of the Israel Securities Authority, with representatives from the Ministry of Finance, the Bank of Israel and the TASE.
Market Makers in Securities or in Corporate Bonds
A market maker in securities or in corporate bonds may be a TASE member or a subsidiary thereof. A company may not act as a market maker in securities issued by it or by a corporation that controls it, or by a corporation that it controls, or by a corporation that is controlled by a controlling shareholder in the company. The company and the market maker agree upon the terms of the contract, including the payment of the company to the Market Maker, and then request TASE approval.
Many companies have appointed a market maker for their securities. Most of the market making is done in shares, but some of the companies have also appointed market makers for the bonds they have issued.
Three market makers operate in the TASE in securities and corporate bond trading: