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The New York Stock Exchange is bullish it will attract more Israeli listings and initial public offerings in 2006, as it eyes smaller and medium-sized companies after this week's merger with the electronic trading firm Archipelago Holdings.
"Israel is the market where Nasdaq is ahead of us. We are here to change this," said David Griffiths, NYSE Senior Managing Director of Europe, Middle East and Africa at the Oppenheimer Conference "Going Public in the United States or London?" in Tel Aviv on Wednesday.
"The NYSE Arca platform will be geared to provide a viable new alternative for Israeli early-stage, high-quality companies that would not qualify or were too small for the main market," he said.
Arca was not expected to compete with the UK's Alternative Investment Market.
"NYSE Arca's financial standards will be slightly lower than the Nasdaq requirements so as to provide a challenge to the latter but much higher than AIM standards," said Ranan Lachman, Vice President Investment Banking at Oppenheimer & Co Inc.
Griffiths indicated that the financial criteria for listing on NYSE Arca would be lower than for the US main markets and said the exchange would soon return to Israel to solicit listing candidates once the standards of the platform are determined.
The merger with Archipelago provides the NYSE with a second listings platform for companies that do not yet meet the NYSE's or the Nasdaq's listings standards for earnings history or company size. The merger changes the exchange from a Self Regulatory Organization (SRO) to a "for profit," publicly traded company. Wednesday marked a historical milestone for the NYSE as it made its market debut after more than 200 years as a club, listing its own stock under the ticker "NYX." The new stock jumped more than 7 percent in early trade and was up 16% to over $70 by mid-morning.
Under the NYSE Group Inc. umbrella is the NYSE main market as known today and the new NYSE Arca, the electronic exchange of Archipelago.
Its US rival Nasdaq was automated long before Archipelago, and it remains the NYSE's biggest competitor.
"NYSE Arca is a direct response to the electronic listings platform, which we already offer. 2005 has seen five new listings from Israeli companies. We can expect at least the same for this year," said Asaf Homossany, Managing Director Middle East and CEE of Nasdaq.
Since the Sarbanes Oxley Act, which made IPOs more complicated and costly, many Israeli companies have stampeded away from US markets to list on London's AIM exchange. The relative ease of issuing stock on London's AIM and lenient accounting methods have turned AIM into the main market for Israeli companies.
"Israeli companies which have listed on the European markets would not have qualified for listing on Nasdaq because of regulatory or financial standards," Homossany said.
Although there have been some success stories of Israeli companies listing on the European markets, many Israeli shares have not done well.
"The key is not to look at AIM as an exit market, but as a way of expanding your business. Make conservative valuations and be truthful to your figures as the market is unforgiving," said Mody Ashkenazy, CEO of AIM-listed Metal-Tech Ltd. at a forum on what makes a successful Israeli IPO.
Other criteria mentioned was the choice of a lead underwriter and willingness to to listen to its advice.
"You have to put the Israeli ego aside and focus on good investor and public Relations," said Arik Alcalay, CEO of Leadcomm Integrated Solutions Ltd., which listed on the AIM last year.