The Israel Securities Authority on Wednesday unveiled a report recommending ways
to improve liquidity in the Tel Aviv Stock Exchange, including lowering capital
gains taxes to 15 percent, reducing trading fees and establishing new
technological infrastructure to facilitate trading.
“We want to lead a
change at the exchange that will stabilize it in its proper position as a growth
engine of the economy and as one of the main pillars of Israeli industry, which
will increase growth, reduce unemployment and create jobs,” ISA chairman Shmuel
According to the report, commissioned in April and written
by a committee headed by Moshe Ben Horin, daily turnover at the exchange dropped
from NIS 1.25 billion-NIS 1.5b. a day from 2008-2010 to NIS 600b.-NIS 800b. a
day in 2012. Of the average daily trading volume, 85% was confined to 35
“The exchange had significant successes over the years, such
as computerized trading two decades ago,” Ben Horin said. “However, the
developments in recent years have not benefited the exchange. Today, the
exchange suffers from a lack of liquidity in share and in derivative
instruments, a sharp decline in the number of listed companies listed and a weak
Over the summer, the exchange’s CEO Esther Levanon and
chairman Sam Bronfeld, who have been at loggerheads with Hauser, announced they
would step down. A search for new leadership is currently under way.
report had 12 primary recommendations, the first of which was to examine
reducing capital-gains tax.
“We need to convince the government that the
tax reduction... will lead to an increase in revenues,” Hauser said. Revenue
from increased trading would ultimately outweigh taxes lost by a lower rate, he
said. Similarly, the report recommended reducing the fees for trading, which are
nominally small but add up to vast amounts for regular traders.
report also recommended reexamining the membership structure at the exchange,
opening it to new types of companies and creating a centralized computer
database for clearing transactions.
Opening up the exchange to financial
products such as credit default swaps (CDS), contract for difference (CFD) and
separate trading of registered interest and principal of securities (STRIPS)
would also be useful, the report said.
Asked whether the idea of merging
the TASE with another exchange abroad was on the table, Ben Horin did not
dismiss the idea but said such a step could only occur further down the
“Before a merger there needs to be a structural change,” he said.
“It’s somewhat premature to talk about mergers.
Plus, we have unique