|Investing on TASE|
|What is TASE?|
The Tel Aviv Stock Exchange (TASE) is a private company, which was established in 1953 by its members
, banks and brokerage firms, in order to institutionalize and serve securities trading in Israel.
TASE, which is located at 2 Ahuzat Bayit St. Tel Aviv, operates automated trading systems for all the securities traded on it: shares, convertible securities, bonds, T-bills (MAKAM), index linked notes (such as index and reverse certificates ) and derivatives (options and futures).
TASE is also responsible for clearing all transactions. Clearing and settlement is carried out by the TASE clearing houses
, which complete the trading transactions. Subsequent to the purchase of securities, the clearing house mediates the transfer of securities to the TASE member's (bank or broker) account of the buyer and the transfer of funds from the buyer to the seller.
|Why is a stock exchange necessary?|
Stock exchanges constitute one of the main avenues for companies and governments to raise capital, through the issue of stocks and bonds. The business sector uses the money raised to finance investment, such as R&D, new plants and equipment and human resources and to fuel corporate growth. This capital also enables entrepreneurs to grow and develop their enterprises. In addition, the government divests its holdings in government companies through privatization offerings to the public.
The primary role of a securities exchange is to provide liquidity for securities issued in public offerings. At an exchange, the long-term financing sought by corporations meets investor preference for investments that can be liquidated at short notice and low cost. By providing liquidity for otherwise illiquid long-term investments, securities exchanges facilitate capital formation and economic growth.
|What is traded on TASE?|
The most familiar "product" traded on TASE is a share. A share is a type of security that constitutes a deed of ownership of part of a company and entitles its holder to the status of 'partner' in a company. The greater the shareholdings, the greater the relative portion of the 'partnership'.
|How is TASE regulated?|
Israel's Securities Law demands that TASE be managed as a public institution for all intents and purposes. Of the 16 members on the TASE Board of Directors
, eight are representatives of the public appointed by a public committee. The Law specifically stipulates that brokerage firms and banks, which own TASE, are entitled to appoint only 7 board members, which cannot constitute a majority of the Board. In addition, the appointment of the Chairman of the Board must be approved by the Chairman of the Israel Securities Authority (ISA)
The ISA is the public authority charged with supervising TASE activity. The Law demands that TASE adopt written rules and regulations as a condition of licensing. The TASE Rules and any amendments to them are subject to the approval of the Ministry of Finance
after consultation with the ISA, as well as to approval by the Knesset Finance Committee.
TASE is entitled to adopt regulations under the Rules. TASE regulations and any amendments to them are subject to ISA approval.
|How is trading on TASE conducted?|
|What are TASE's sources of revenue?|
|TASE collects commissions on each security sale and purchase. For each shares transaction of approximately NIS 100 thousand, TASE charges its members a few shekels. In addition, TASE collects fees from listed companies and charges for the provision of real time data services. TASE revenues cover the expenses involved in conducting sophisticated trading and clearing operations. The remainder of its revenues is earmarked for investment in improving these systems, for providing various services and for creating reserves to cover lean years and unanticipated contingencies.|
|What are the advantages of automated over floor trading?|
Automated trading introduced equal access to securities trading – portfolio managers, institutional investors and the man on the street receive the same information
at the same time.
In addition, in comparison with floor trading, automated trading accommodates the efficient execution of a large number of transactions and enhances the capacity for control, enabling, for example, more effective investigations into suspected market abuse and prevention of technical errors.
|How can one learn more about TASE and Israel's capital market?|
|How can one invest in TASE?|
The investors can buy and sell securities through a "TASE member".
TASE members serve investors through investment advisors, marketing agents or portfolio managers licensed by the Israel Securities Authority.
In order to trade in securities, one must open an account with a TASE member. One may also receive permission from a TASE member to conduct transactions online. As stated above, all transactions are always executed through a TASE member.
It is important to emphasize that all trading is anonymous, i.e., the order transmitted from the TASE member's IT system does not include the name or other particulars of the investor.
For a list of TASE members, click here.
| ||Securities, Indices and TASE Trading|
TASE develops and calculates a wide variety of indices. An index reflects average price levels of a selected group of securities. The TA-25 index, for example, reflects average prices of TASE's 25 most highly capitalized shares. Index changes reflect average returns to investors from these shares.
All constituent shares in a TASE index must meet the criteria of the "equity indices universe
" and each index has its own specific rules regarding its potential constituent securities.
The Tel-Bond indices
track the average price movements of corporate bonds. Other indices track various groups of securities and are published at the end of the trading day.
On the TASE website, each index has a dedicated "Index Page", which includes the following tabs:
- About the Index
- Index Components (Constituents)
- Index Linked Notes – additional TASE-traded products based on the index (i.e., for which the index serves as underlying asset)
- Charts – from 2000 onwards
- Historical Prices – from 2000 onwards
- Corporate Disclosures – latest filings by index constituents from the MAYA website (Hebrew only)
|Shares and Convertible Securities|
What is a share?
A share is a type of security which constitutes a deed of ownership of part of a company and entitles its holder the status of 'partner' in a company. The greater the shareholdings, the greater the relative portion of the 'partnership'.
The proceeds received by the company from the sale of its shares are designated to finance its activity: for example, new product development, the acquisition of new equipment or the enhancement of its work force.
When a company distributes its profits to shareholders (dividends), all shareholders receive cash according to their relative ownership of the company's shares.
What is a convertible security?
Convertible securities are securities which can be converted into other securities. The conversion is carried out under preset conditions that were published in the offering prospectus.
There are two main types of convertible securities:
- Warrants – securities which give their holder the right of conversion into a share at an "exercise price" set in advance and stipulated in the offering prospectus.
- Convertible bonds – bonds which are convertible into shares. The conversion is carried out according to a preset conversion ratio.
|Bonds and T-bills (MAKAM)|
What is a bond?
A bond is a type of loan or obligatory note. The company issuing bonds borrows money (bond principal) from the purchasers of the bond, and undertakes to return it with interest, and, at times, with linkage to the CPI index or to a foreign currency. As is the case with bank loans, the return of principal and interest are carried out under preset dates and conditions which are stipulated in the bond offering prospectus.
The following types of bonds are traded on TASE:
- Bonds issued by the government of Israel
- Corporate bonds (issued by corporations)
What is a T-bill (MAKAM)?
A T-bill (MAKAM or "short-term note") is a non-linked zero-coupon bond issued by the Bank of Israel for a period of up to one year. Investors purchasing this bond receive 100 agorot (one agora = NIS 0.01) at redemption. The return on the MAKAM is determined by the price at which it is purchased (usually by discount). For example, an investor purchasing 6-month MAKAMs for NIS 97 and holding them to redemption will receive NIS 100.
MAKAMs are similar to short-term bank deposits. However, unlike the bank deposit, they can be sold on a daily basis and do not need to be held until redemption.
|Index Linked Notes|
Index linked notes are financial instruments which track shares and bonds indices, enabling investors to purchase a traded "basket" of securities included in the tracked index. In this manner, investors can "link" their investment to the performance of an index in a convenient and cost-effective manner. The types of these financial instruments traded on TASE also include: index certificates, reverse certificates, and commodity ETNs.
For further information concerning index linked notes, click here
A mutual fund is a financial instrument which enables one to invest in securities through participation in a pooled investment portfolio that is managed for investors by a mutual fund management company ("mutual fund manager"). Mutual funds are not traded on TASE.
Investment in a mutual fund is made by purchasing participation units, which entitle their holders to a portion of the portfolio. Valuation of the units is undertaken on a daily basis and reflects the net asset value (NAV) (i.e., the value of assets minus liabilities) of the portfolio.
For further information regarding mutual funds, click here
Derivatives are financial instruments, for which the prices are derived from the value of another asset, known as the "underlying asset". For example the price of derivatives written on the TA-25 is a function, among other things, of the value of this index as it fluctuates throughout the course of trade. Two types of derivatives are traded on TASE: options and futures.
For additional information regarding the derivatives market, click here
|Trading stages and securities pricing|
|Where can one find market data on TASE trading?|
TASE market data can be found at:
1. The TASE website - www.tase.co.il
The TASE website contains updated market data (displayed at a 20 minute delay), including security and index prices and turnovers, as well as historical prices for shares and TASE indices.
For an explanation on downloading historical price data, click here
For further information as to how to navigate the TASE website, click here
2. Data vendors
Authorized TASE data vendors are specialists in the field of data dissemination using software or websites, which have been authorized by TASE to disseminate data from the TASE trading systems.
For a list of authorized TASE data vendors, click here
3. TASE members
The websites of the TASE members enable their customers to view securities market data in real time to facilitate the submission of buy and sell orders during trading.
|Can one visit the trading floor?|
TASE trading is fully automated and is carried out over computer networks.
In 1997 the TASE introduced a fully automated trading system called TACT (Tel Aviv Continuous Trading)
. By October 1999, all shares, bonds, T-bills and derivatives have been migrated to the new electronic trading platform, marking a new step in the history of the Tel Aviv Stock Exchange.
|Securities & Derivatives Prices|
Securities prices are quoted in agorot. One agora equals NIS 0.01.
Derivatives (options and futures) prices are quoted in NIS.
|Trading Days and Holidays|
|Additional explanations on how to navigate the TASE website|
|Public inquiries to TASE|
Extensive information on TASE activities can be found on the TASE website.
For an explanation regarding the structure of the website menus, click here.
For a site map, click here.
Inquiries can be submitted:
- Through the "contact us" form, which is classified according to topic.
- Telephone: 076-8160411, on TASE business days.
- Address: 2 Ahuzat Bayit St. Tel Aviv, 6525216.
Historical data is available for payment through the "contact us" request by selecting "Historical Data"
|For technical support regarding the TASE website, call 076-8160666, on TASE business days.|