The entities that will be allowed to act as market makers in shares and bonds are Exchange members or their subsidiaries; in derivatives, market makers need not be Exchange members.
Market makers will be seamlessly integrated into the existing TASE order-driven trading system and will not receive priority over other investors in trades or information. Market makers will be required to route buy and sell orders on a regular basis. Market makers will be required to quote two-way bid and offer prices, with a minimum volume size and within a maximum price range, or spread, expressed in percent. Market makers' quotes must be on TASE screens for at least 80% of the trading day. The Exchange will monitor the market makers' compliance with the rules through a computerized system.
In addition, the Exchange plans to offer reduced commissions to market makers on the derivatives market. The number of market makers in each derivative product will not exceed six. The value of trades executed by a derivatives-market maker must be at least 1.5% of the total trading volume.
Saul Bronfeld, Managing Director of the TASE, said the Exchange is working simultaneously on approving the new rules and developing an automated system that will monitor market makers' compliance with the rules. Mr. Bronfeld hopes that market makers will begin operations as early as this summer.
"This substantial change will improve the liquidity of securities," Mr. Bronfeld said. "Implementation of market makers on the Tel Aviv Stock Exchange brings the Exchange in line with its counterparts worldwide."
Market Makers' Obligations
| Maximum Spread | Minimum Amount (ILS) | |
| TA-25 Shares | 2% | 10,000 |
| TA-75 Shares | 3% | 6,000 |
| Yeter-150 Shares | 5% | 3,000 |
| Other shares | 8% | 2,000 |
| Makam and Commercial Papers | 0.15% | 100,000 |
| Short-term Shachar and Gilon bonds | 0.25% | 100,000 |
| Other Bonds | 1.5% | 30,000 |
| Equity Index Derivatives | 6 ticks | 10 options |
| Currency Derivatives | 8 ticks | 10 options |
The decision of the TASE's board is subject to approvals from the Israel Securities Authority and the Knesset, Israel's parliament.
