The Knesset Finance Committee vowed action to improve the Tel Aviv Stock
Exchange’s functioning at an emergency meeting on Wednesday.
“This is an
earthquake. The activity of the stock exchange fell on a large scale, from a
turnover of NIS 2.4 billion until a few years ago to [NIS 900 million today],
and many companies are delisted while few join” said committee chairman Nissan
Slomiansky, vowing to do whatever was necessary to fix the situation.
exchange hit a crisis in recent weeks, with both its CEO Esther Levanon and its
chairman Saul Branfeld announcing their resignations, as some of Israel’s
biggest listed companies took significant plunges.
Authority chairman Shmuel Hauser, who has been publicly critical of the
exchange’s leadership, called for fundamental structural change at the
“The absence of an efficient stock market hurts the ability of
companies and investors and even the government to raise capital. In the end,
that hurts growth and also employment,” he told the committee.
protested that changes in leadership were not the solution, arguing that many
factors contributed to the slump in the stock exchange. Activity slumped in the
1990s and early 2000s, he remarked, but instead of changing the leaders, “there
were solutions and the stock market came out of the crisis.”
the importance of the stock market in Israel’s overall capital markets, “There
is plenty we can do even if we won’t be an international financial center, which
we should not strive to be.”
Focusing on the stock market’s shortcomings
instead of the robustness of the broader capital markets was like paying
attention to a kettle’s whistle instead of the entire kettle. The bond market
still managed to raise NIS 40b. in corporate bonds and NIS 80b. in government
bonds, he said.
Labor MK Elazar Stern agreed that there was a regulatory
burden, but complained that it fell short.
“It’s clear that excessive
regulation is reducing activity, but in addition, the investing public in Israel
did not receive what it deserved in terms of standards,” he
Executive pay at IDB, however, skyrocketed even as its numbers
Eli Shani, a private investor participating in the discussion,
said that instead of incentivizing investing, Israel did the
“The tax rate is very high and you cannot offset losses from
one year to the next for the purpose of tax calculations. In practice, the
country loses billions of shekels a year in tax revenues, because of reduced
trade in the capital markets.”