Tel-Aviv Stock Exchange CEO Levanon Resigns Amid Volume Drop

Tel-Aviv Stock Exchange Chief Executive Officer Ester Levanon will step down at the end of the year, a decision that follows a drop in trading volume and the bourse’s failed bid to join MSCI Inc. (MSCI)’s Europe Index.

Levanon, who oversaw the bourse’s shift to developed-markets status, didn’t disclose the reason for her resignation in an e-mailed statement today. The announcement comes a month after MSCI rejected Israel’s bid to join the European measure. The CEO had predicted the move would lure as much as $2 billion in foreign capital.

Trading volume has plunged on the benchmark TA-25 Index (TA-25) since the country was granted developed-market status in May 2010 from its earlier emerging-market rank. That shift was among factors that contributed to the decline, the Bank of Israel said in a March 12 report. Volume dropped 44 percent from the start of 2010 to the end 2012, compared with an 18 percent average global retreat, it said.

“Levanon lost her legitimacy because of the declining volumes,” Yaniv Pagot, chief strategist at Ramat Gan, Israel-based Ayalon Group Ltd., said by phone. “This could have been prevented had Israel entered the MSCI Europe Index. This is a good opportunity to create credibility and change.”

In the first five months of this year, volume fell 7.8 percent, according to data provided by the Tel-Aviv Stock Exchange. The TA-25 Index has gained 3.2 percent this year, compared with an 18 percent advance for the Standard and Poor’s 500 Index. The gauge was up 0.3 percent at the close in Tel Aviv today.

The former manager of computer technology for the Israel Security Agency, known as Shin Bet, joined the exchange in 1986 and became its first female leader in 2006.

Levanon’s resignation “is not a surprise given the decline in trading volumes and the MSCI bid,” Gilad Alper, a senior analyst at Tel Aviv-based Excellence Nessuah Brokerage Ltd., said today by phone. “Whoever takes her place must try to deregulate the market and thereby attract new companies and investors.”

Mellanox Technologies Ltd. (MLNX) in May announced the company would delist from the Tel Aviv bourse. Chief Executive Officer Eyal Waldman said it was leaving the exchange due to added regulation.

To contact the reporters on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net; David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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