Liquidnet launches TASE trading in Israeli equities

The company’s system makes it possible to connect between institutional investors seeking to buy large blocs of shares and investors seeking to sell.

By SHIRI HABIB-VALDHORN
tase building 224 (photo credit: Courtesy)
tase building 224
(photo credit: Courtesy)
Liquidnet founder, president and CEO Seth Merrin believes that trading volume on the Tel Aviv Stock Exchange could soon grow and that international institutional investors will enter the market. Institutional investment company Liquidnet Holdings Inc. is now operating in the Israeli market.
Liquidnet, founded in 2001, enables institutional investors to buy and sell blocks of shares anonymously. The company’s system makes it possible to connect between institutional investors seeking to buy large blocs of shares and investors seeking to sell, and if a match is made, to strike a deal. This saves money and prevents sharp fluctuations on the market.
The TASE is the 37th stock market in which Liquidnet operates. Theoretically, its 600 customers, including hedge funds and pension funds, could soon invest in TASE-listed companies. Merrin said the company’s clients manage $16 trillion.
“Israel is a very attractive market, including for me personally,” he told Globes in an interview. “I’m very excited that we’re beginning operations in Israel.”
Although he resides in New York with his wife and three children, Merrin makes frequent trips to Israel and maintains a home in Herzliya. He speaks a little Hebrew.
Merrin admits that he waited a long time to begin business in Israel. The MSCI upgrade of Israel to developedmarket status earlier this year paved the way for Liquidnet’s decision to begin operating in the local market. Merrin said Israel’s classification as a developed market increases investors’ interest in the country, but their ability to invest is limited by the problem of liquidity of TASE-listed companies. If a foreign investor already invested, any order is liable to shake the TASE.
This is where Liquidnet enters the picture.
“We bring a lot of institutional liquidity with us and match orders more efficiently,” Merrin said. “Investment institutions that could not previously invest in these markets are beginning to invest in them. It takes time and does not happen overnight, but in all the markets we’ve entered, we’ve increased the trading volume.”
Merrin believes this can have a positive effect on the market cap of local companies.
In the past year, Liquidnet has entered New Zealand, Poland, Mexico, Slovenia, Lithuania and Estonia. Liquidnet will operate in Israel in collaboration with a TASE member, whose identity it did not disclose.
Merrin said the company has met Israeli parties, including TASE CEO Esther Levanon. “It was very important that everyone understood what we’re doing,” he said.