The Tel Aviv Stock Exchange will probably sign a deal with a leading derivatives exchange this week to issue futures on Israel’s benchmark equities index from the first quarter, Chief Executive Officer Ester Levanon said.
“They will issue futures on the Tel Aviv 25,” the outgoing CEO said in an interview with Bloomberg TV in Tel Aviv yesterday. “We should have alliances with a big exchange and get everything we can from that alliance, but not be swallowed.”
Levanon has been seeking to create futures trading in the TA-25 to help boost volumes after failing to get Israel included in the MSCI Europe Index and pare back what she calls over regulation of the bourse. The measure advanced 0.3 percent to 1,323.39 at 10:47 a.m. in Tel Aviv.
“The accord with a derivatives market could increase liquidity to some extent,” Gilad Alper, a senior analyst at the brokerage unit of Ramat-Gan based Excellence Nessuah Investment House Ltd., said by phone today. “The question is by how much.”
Levanon resigned his seven-year tenure in July after failing to revive volumes amid company delistings. The country’s reclassification to developed- from emerging-market by MSCI Inc. in May 2010 sent volumes tumbling 44 percent through the end of last year, according Bank of Israel data. Mellanox Technologies Ltd. (MLNX) delisted from the Tel Aviv exchange on Sept. 1, while fertilizer maker Israel Chemicals Ltd. (ICL) said in November it’s looking to list shares elsewhere.
“MSCI is one of my biggest regrets, but I think that will probably be resolved over time,” Levanon said. “The second regret is not being able to convince the regulators in Israel to ease up. That is why companies decided they should leave Israel and have an IPO somewhere else.”
While Israel has more active startups per capita than any country, the exchange is failing to attract companies like Wix.com Ltd. (WIX), a web platform developer, which debuted on the Nasdaq Stock Exchange last month.
The Tel Aviv bourse has taken steps to boost volumes, such as extending the trading day. A trading-volume panel in September made interim recommendations, including adding Friday as a trading day, changing the bourse’s fee structure, encouraging brokerage competition, offering new products, including credit default swaps, and encouraging research.
Average daily trading volume at the exchange in November rose to 1.18 billion shekels ($337.4 million), compared with a 1.08 billion shekel average in 2012, according to data provided by the bourse. Yossi Beinart, who headed the IG Group Holdings Plc’s Nadex binary options exchange, is scheduled to take his position as the new head of the exchange on Jan. 1. The bourse is also looking for a new chairman to replace Saul Bronfeld who resigned in July.