TASE Indices Reform Completed

At the close of trading session Today, February 1st, 2018, the composition of the Indices will be updated and the Indices Reform will be fully implemented. The New TA-Sector Balance Index will be launched on February 4th, 2018

Today, February 1st, 2018, the final stage of the all new indices methodology will be implemented and the “New Methodology Transition Period” will come to an end.
The most major changes expected in the composition of the indices are as follows:

The TA-90 Index that currently includes 98 shares will consist of 90 shares.
The TA-125 Index that currently includes 133 shares will consist of 125 shares.
The Free Float rate for flagship indices has been increased from 30% to 35%.
The weighting of pharma shares in the TA-35 Index will be reduced to just 17% and no foreign shares at all will be included.
325 shares will be included in the equity indices. Except for one share, all the shares have strong Israeli orientation.

Information about which shares are being deleted from and added to the indices at the close of trade on February 1 can be found at the following link.

The reform’s goals
Below is a short review of the attainment of the main goals of the reform, as presented in August 2015:

Goals	Actual Results
Reducing concentration	- Most of the TASE indices have been expanded and weight caps have been reduced. - Indices are now more diversified and more robust. - The flagship indices have yielded a positive return against the background of a challenging year for the major shares.
Significantly increasing Free Float rate	- The Free Float has grown by NIS 27 billion on some 250 companies, since August 2015. Many of the companies have taken a proactive approach in preparation to the reform.
Encouraging SME companies	- Some 100 shares with a market value of NIS 40 billion have been added to the indices, most of them SME shares. - The scope of the “Indices Investments” in SME companies has grown by hundreds of percent. - Contribution to reversing the trend in the liquidity of the small shares – the trading volumes in SME shares have almost doubled. - Contribution to stimulating new IPOs – 20 new shares were listed in 2017 – all being SME shares.
Reducing risk exposure to investor	- Deployment of mechanisms to prevent methodological exposures for index investors - Powers prescribed for the indices committee. - Despite the 50% expansion in the number of shares included in the indices and the increase in company events in the past year, no events have been recorded that have created a methodological exposure for investors. - The risk exposure of index products has decreased significantly.
Limiting the “Index Effect” phenomenon	- Implementation of the monthly updating model that enables significant monthly “trading windows” for which the market is prepared and enables institutional investors to expand their market involvement. - Graduated processes have been implemented for major changes in the indexes. - Significant events have been managed by a graduated reduction in the weighting caps. For example, the merger of Avner participation units into Delek Drilling, the graduated changes in the weighting of Teva and the graduated removal of Mylan from the indices. - Despite changes of a significant scope in the indices, no exceptional fluctuations in prices have been recorded since the launch of the reform.
Strengthening Israeli Orientation	- Only shares having a strong Israeli orientation can be added to the TASE indices (existing foreign shares can continue to be included therein). - 325 shares will be included in the TASE equity indices in the forthcoming update, with only one share having no Israeli orientation whatsoever.
New local indices	3 new market indices: - TA Sector-Balance - TA-SME150 - TA-Rimon

TA Sector-Balance Index
The Reform Implementation completion accord includes the launch of a new index – the TA-Sector Balance.
The Index consists of 100 shares and is constructed according to strict criteria regarding sectoral diversification and a low weighting ceiling per share, with the aim of providing a balanced representation of the various economic sectors of the companies listed on TASE.