Establishment of a stock exchange requires a license from the Minister of Finance (Section 45(A) of the Law). The Law stipulates various mechanisms that regulate the operation of the TASE, as follows:

A.     Composition of the TASE Board of Directors:

Under the Law, the majority of the Board must be directors unaffiliated with TASE members.

Five external directors are selected by an appointments committee headed by a judge, as stipulated by the Law. One director is appointed by the Minister of Finance, and one director is appointed by the Governor of the Bank of Israel.

The Chairman of the Board of Directors is elected by the Board, with the approval of the Chairman of the Israel Securities Authority. The Chairman of the TASE must fulfill the terms of qualification for an external director. The CEO also serves as a director without voting power and must meet the terms of qualification for an external director, as well.

Seven directors are selected by the TASE members, according to the TASE’s Articles of Incorporation.

B.    Obligation to Set up Rules and Obtain Their Approval

The Law requires the TASE to set up rules, as a condition to receive its license. The Rules and any amendment thereto must be approved by the Minister of Finance in consultation with the Israel Securities Authority and by the Knesset (Israeli Parliament) Finance Committee.

The TASE may formulate Regulations based on the Rules. The Regulations and their amendment require approval of the Israel Securities Authority.

The TASE Rules and Regulations include guidelines concerning the following, among others: TASE members, listing securities, maintenance, trading, publication of information by the TASE, and fees charged by the TASE.

C.    Supervision by the Israel Securities Authority (ISA)

The Israel Securities Authority supervises the fair and proper management of the TASE, as well as the activity of the TASE Clearing House and MAOF (Derivatives) Clearing House.

A representative of the Israel Securities Authority is entitled to attend general assemblies and meetings of the TASE Board of Directors and its committees.

D.    Appellate Instance

Anyone considering themselves injured by a TASE decision, excluding decisions in the course of trading on the TASE, or anyone considering themselves injured by a decision to reject their application for TASE membership, may appeal at the Court.

E.     Public Notification of TASE Decisions

The TASE publishes its Rules and Regulations and any amendments thereto by means of deposit with the Companies Registrar. In addition, the TASE routinely publishes resolutions passed by the TASE Board of Directors' on the TASE website.

TASE members that are banks are supervised by the Supervisor of the Banks at the Bank of Israel. Through the Membership and Supervision Department, the TASE supervises TASE members’ compliance with the principles set forth in the TASE Rules and the Regulations.

Mutual fund management entities are subject to the directives set forth in the Joint Investment Trusts Law, 5754-1994.

Entities engaged in portfolio management and investment consulting are subject to the directives set forth in the Regulation of Investment Advice and Investment Portfolio Management Law, 5755-1995.

Companies whose securities are listed on the TASE are subject to the directives set forth in the Securities Law and in its Regulations. Such companies are also subject to the directives set forth in the Companies Law, including directives related to their corporate governance, such as the obligation to appoint external directors, an audit committee and an internal auditor.