The Finance Minister Has Approved A Series Of Substantial Reductions And Changes To The Qualification Conditions For Remote Membership Of The Tel-Aviv Stock Exchange

The approved reductions include a substantial decrease in the minimum equity requirement, which has been a barrier to entry to the Tel-Aviv Stock Exchange (TASE) for foreign entities, and an expansion of the list of countries of incorporation of a remote member, to include all the countries in the European Union, as well as Hong Kong and Singapore.

Ittai Ben-Zeev, CEO of TASE: “As part of the historic process of the TASE IPO and its becoming a public company, TASE’s doors are being opened to stock exchange members and investors from all around the world. This process will enable many entities who have not previously met the criteria for TASE membership to become members, thereby increasing competition, enabling greater exposure to international investors and increasing liquidity in the Israeli capital market.”

Following the Finance Minister’s approval, today (Tuesday) a series of reductions and changes to the qualification conditions for remote members of the Tel-Aviv Stock Exchange (TASE) will enter into effect, which will open the door for many previously ineligible companies to become TASE members.
As part of this development, several changes have been made to ease the qualification conditions and requirements for a remote member, the main one being a change in the minimum equity requirement. Until now, the minimum equity requirement for a remote member was $1 billion. This requirement was substantially stricter than the equity requirement for local TASE members, which is NIS 22 million, and was also stricter than the standard remote member equity requirement at various stock exchanges around the world.

In order to make the remote member requirements equal to those for local members, a reduction in the minimum equity requirement for a remote member was approved, such that the equity required from a remote member would not be less than the higher of: the equity required from that member in its country of incorporation, or in the countries in which it acts as a stock exchange member and from which it wishes to operate on TASE, and the equity required from a non-banking member (NBCM).

Another change that entered into effect is the expansion of the countries of incorporation of a remote member. Prior to the change, a remote member could be an entity from a developed Western country, according to a specific list of countries set out in TASE’s Rules (the United States, the United Kingdom, Germany, Switzerland, Japan, Canada, Austria, France, Norway, the Netherlands, Sweden, Denmark, Finland, Belgium and Australia). As part of the changes, the list of countries was expanded to include all the countries that are members of the European Union, as well as Singapore and Hong Kong.

The list of stock exchanges and the period of time that they need to have been members have also been changed. According to the TASE Rules, an entity wishing to be accepted as a remote member must have been a member, for at least ten years, of at least one of the following seven stock exchanges: LSE, EURONEXT, NYSE, DEUTSCHE BORSE, EUREX, SIX, TSE. As part of the changes, the list of stock exchanges from which a member may be accepted as a remote member of TASE was expanded to also include the following exchanges:

CME (Chicago Mercantile Exchange)
CBOE (Chicago Board Options Exchange)
ICE (Intercontinental Exchange – Electronic exchange for the trading of financial assets and commodities)
ASX (Australian Securities Exchange)
TSX (Toronto Stock Exchange)
SGX (Singapore Stock Exchange)
HKEX (Hong Kong Stock Exchange)

The requirement for a minimum period of membership of one of these stock exchanges was also reduced, and it was decided to change it to three years.

Alongside the easing of the requirements, additional conditions were also set for a remote member. These include the stipulation that a remote member may not lobby Israeli customers to operate via it, i.e. it will not be able to initiate contact with Israeli customers and offer its services to them. Various reporting requirements, both immediate and periodic, were also set for remote members.

A remote member of TASE will continue to be required to meet various qualification and acceptance conditions, including requirements related to insurance, the supervision by authorities in the countries in which it is incorporated and operates as a stock exchange member, and an information technology set-up that enables it to operate on TASE.

Ittai Ben-Zeev, TASE CEO: “As part of the historic process of the TASE IPO and its becoming a public company, TASE’s doors are being opened to stock exchange members and investors from all around the world. This process will enable many entities who have not previously met the criteria for TASE membership to become members, thereby increasing competition, enabling greater exposure to international investors and increasing liquidity in the Israeli capital market.”