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.The 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.Israel Securities Authority chairman Shmuel Hauser, who has been publicly critical of the exchange’s leadership, called for fundamental structural change at the exchange.“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.Branfeld 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.”He minimized 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 said.Executive pay at IDB, however, skyrocketed even as its numbers faltered.Eli Shani, a private investor participating in the discussion, said that instead of incentivizing investing, Israel did the opposite.“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.”
