TASE New Indices Reform – November 2023

The methodology introduced by the new reform is designed as a significant incentive for the public companies to enhance the liquidity of the company’s shares. The reform encourage liquidity and will benefit the companies that will enjoy enhanced liquidity of their shares, with a corresponding increase of their weight in the index.

Additional changes under the new reform, alongside liquidity, are the curbing of the fast-track mechanism, which causes frequent additions and deletions that are detrimental to the indices’ returns; the gradual raising of the weight cap for shares in investment-intensive indices; limiting the free-float increase per rebalance to 5%; transition from monthly to quarterly updates, to reduce turnover and improve the popularity of the index among foreign investors, and cancellation of the free-float rate brackets method. 

The reform will also motivate the execution of transactions as part of the trading on TASE, since OTC transactions will not be included in the calculation of the indices’ liquidity ratios in determining the shares’ weight in the indices.

For additional information on the principles of the reform, click to view the presentation>