The Tel Aviv Stock Exchange. Growth & Opportunity ASE

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1 T The Tel Aviv Stock Exchange Growth & Opportunity ASE

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3 TASE s mission is to promote Israel s capital market and TASE-listed companies in Israel and abroad, guided by standards of excellence and principles of market integrity. TASE aims to position israel as an international financial center for the listing and trading of technology companies.

4 ASE THEN AND NOW Securities trading in Israel dates back to 1935, prior to the establishment of the State, when the Anglo- Palestine Bank Ltd. together with other banks and brokerage firms, founded the Exchange Bureau for Securities, an unofficial securities exchange. 4

5 In 1953, five years after independence was declared, the Tel Aviv Stock Exchange was incorporated. A decade later, a group of exchange members established the TASE Clearing House. In 1968, Israel s parliament, the Knesset, enacted the Securities Law, and established the Israel Securities Authority (ISA), which created a solid regulatory framework for TASE operations. TASE has played a pivotal role in the reforms transforming Israel into a dynamic, marketdriven economy. It has been instrumental in Israel s evolution into a highly entrepreneurial start-up nation. 5

6 ONE ST 13% 21% 5% 2% International investors can diversify their P 59% portfolio by investing in TASE-traded securities, including: stocks, bonds, ETNs, options and futures, convertible securities and T-bills (MAKAM). SHOP TASE is a one stop shop for securities trading in Israel, fully automated, real-time, and order-driven. Sophisticated information systems disseminate market data, making them readily available to investors worldwide. Safety mechanisms such as price monitoring and circuit breakers are integrated into the trading system, in order to mitigate risk while maintaining liquidity. Trading continuity is also ensured by a state-of-the-art backup installation, which enables seamless transition and restoration of trading in emergency situations. In addition to the listing, trading, and information services, TASE calculates and publishes indices, which serve as underlying assets for derivative and ETNs. It also develops and launches new derivative products. TASE operates two clearing houses. The MAOF Clearing House clears and settles derivative transactions. The TASE Clearing House (TASECH) is the central counter party (CCP) for all TASE and MTS-traded securities. Both are wholly-owned TASE subsidiaries and each is backed by a mutual risk guarantee fund. Securities are cleared on T+1 and settled through the Bank of Israel s RTGS payment system on a delivery-versus-payment (DVP) basis. 6

7 TASECH also handles the creation and redemption of mutual fund units and provides global clearing, settlement and custody services for securities traded in the US (Galaxy) in conjunction with Citigroup. TASECH is a DTC participant, for the purpose of transferring dual listed securities between Israel and U.S. All these processes are fully automated, minimizing the risks associated with clearing and settlement. In 2011, TASECH was awarded an A + overall CSD risk rating by Thomas Murray, indicating a low-risk profile. Trading on TASE: Sunday through Thursday, 9:00-16:30 (Israel time) 7

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9 TASE ON THE AP Developed Market With the globalization of financial services, the scope of TASE s international activity and its global footprint has grown over the years. Israel is a member of the Organization for Economic Co-operation and Development (OECD) and its capital market is categorized as a developed market by the major international index firms, MSCI, FTSE and S&P. This designation, together with Israel s robust economy, excellence in technology industries, and advanced capital market infrastructure renders TASE a prime venue for international investment. International Members Seven international banks and brokerage houses have joined the ranks of TASE members: Barclays Bank, Citibank, Citigroup, Deutsche Bank, HSBC, Merrill Lynch International and UBS. International Cooperation Agreements TASE has entered into Memoranda of Understanding with NASDAQ OMX, NYSE- Euronext, the London Stock Exchange, the Shanghai Stock Exchange and the Toronto Stock Exchange. TASE is a member of the World Federation of Exchanges (WFE), an affiliate member of the International Organization of Securities Commissions (IOSCO) and observer member of the Federation of European Securities Exchanges (FESE). 9

10 T SE TECH 62% 10% 15% 11% Israel is bullish on technology. Know-how mixed with a healthy dose of entrepreneurial spirit has established Israel as a major center for innovation in key tech industries, such as communications, IT, medical devices, biotech, and agricultural and environmental technologies. As of the close of 2011, about 140 technology companies are TASE-listed, almost 60 of which are biomed firms and 50 are dual-listed on U.S. exchanges. TASE has set as one of its strategic goals its development as a financial hub for technology companies. 10

11 TASE s aim is to position itself as a financial center, providing a home for technology IPOs and a bridge to international cross listings. TASE believes it can become an international financial center for both local and foreign tech companies and investors. While TASE listing requirements establish serious thresholds for all listed firms, to accommodate technology listings, TASE has adjusted listing requirements, rendering it one of the most accessible platforms for promising technology companies seeking public financing. 11

12 200 DUA LISTINGS The TASE offers companies traded in the U.S.A. and U.K. an attractive way to dual list their shares on the TASE. Companies whose shares are traded on the NASDAQ, the New York Stock Exchange (NYSE), NYSE AMEX, or the London Stock Exchange (LSE) Main Market Premier Listings can take advantage of special dual listing arrangements. It does not impose any additional regulatory burden nor does it entail significant costs, and they can list shares on TASE based on the prospectus and periodic reports submitted to the relevant foreign regulator. 12

13 The advantages of dual listing have led some 50 companies to list under the dual listing provisions of Israel s Securities Law. Dual listings currently account for approximately one third of TASE s total market cap. These companies enjoy easier access to Israeli and foreign capital, added ongoing exposure among Israeli Institutional and private investors, extended trading hours (due to time zone differentials) and the potential for greater liquidity. 13

14 PROTE INVESTOR 52% 12% TION 17% TASE places great importance on market integrity and investor protection. Israel s securities regulation is comparable to that governing U.S. and E.U. securities markets. TASE is a regulated exchange as well as a selfregulating organization (SRO). Its rules and regulations are designed to ensure transparent, fair and orderly trade as well as the financial and operational stability of its clearing houses and members. The Bank of Israel supervises TASE s bank members. Non-bank members are supervised by TASE s Membership & Surveillance Department The Israel Securities Authority (ISA), a signatory to the IOSCO Multilateral Memorandum of Understanding, is charged with the ongoing supervision of TASE. Over the years, the ISA has built a highly credible and effective regulatory infrastructure, creating a stable environment for international investment. In 2011 the EU Securities and Market Authority, ESMA, recognized Israel s primary market regulatory regime as equivalent to that of the EU. 14

15 No Restrictions, Tax Free International investors face no regulatory restrictions when buying and selling TASE-listed securities or on repatriating the proceeds upon liquidation. Foreign investors are also exempt from Israeli capital gains tax. 15

16 TA-COM TASE INDIC S BUILT-IN 81 DIVERSIFICATION TASE computes and disseminates several indices based on market capitalization, sector, dividend yield, and other parameters. The indices are calculated and rebalanced using methodologies adapted from those developed by the international index vendor, FTSE. 16

17 TA-25 TA- BIOMED TA- TECHNOLOGY TA- BLUETECH 50 TA OIL&GAS TA-100 The variety of TASE indices enhances investor choice and flexibility in asset allocation. They also facilitate the creation of innovative products designed to deliver the benefits of diversification at minimal time and cost to investors. TASE permits third parties to use the prices of TASElisted securities to calculate indices. International index vendors, such as Dow Jones Indexes and S&P, have launched indices on TASEtraded shares. ETNs have since been issued on these indices and are publicly traded on TASE. MARKET CAP, SECTOR, BONDS AND BEYOND Market Cap indices: TASE s flagship index, the TA-25, is comprised of the 25 TASE-listed shares with the highest market capitalization. The TA-100, comprising the 100 TASE-listed shares with the highest market cap, is another Popular TASE market cap index. TA- BANKS Sector indices: These indices capture Israel s key industry groupings. The high tech sector includes three indices: TA-BlueTech 50 - the 50 largest electronics, computers, biomed and cleantech companies, TA-Biomed comprised primarily of biotechnology and medical devices firms, and the TA- Technology index, a composite index of all non-biomed technology companies. Other industry indices include, among others, the TA- Banks index, TA Oil & Gas, TA-Real Estate-15 and TA Com index. TASE bond indices: track both corporate and government debt markets, focusing on CPI-linked bonds and non-linked NIS-denominated bonds. TA-REAL ESTATE-15 17

18 UTURE FORWARD True to its vision, TASE will continue to promote Israel s capital market and its public companies, through continuous investment in trading and clearing technologies

19 TASE will expand the investment opportunities open to local and foreign investors in Tel Aviv by providing new products and services. With an eye to positioning Israel as a hub for the listing and trading of technology shares, TASE is committed to promote capital market growth, and through it the sustained growth of Israel s economy

20 For further information, you are welcome to visit our website at: or contact the TASE Marketing and Communications Unit at (972) /6 20 This brochure is intended solely for personal, non-commercial use. It may not be used for any other purpose whatsoever. This brochure does not constitute a solicitation, offer, opinion or recommendation by The Tel-Aviv Stock Exchange Ltd ( TASE ) to buy or sell securities. Nothing contained herein shall be construed as investment, tax, accounting or legal advice. Moreover, while all information contained herein is obtained from sources believed to be accurate and reliable, TASE is not responsible for any errors or omissions. All information is provided as is without any warranty whatsoever. TASE does not make any representations, and it disclaims all express, implied and statutory warranties of any kind, including warranties as to accuracy, timeliness, completeness, merchantability or fitness for any particular purpose. All rights reserved by The Tel-Aviv Stock Exchange Ltd.