Tel Aviv Exchange to Target FTSE in European Index Inclusion Bid October 23, 2014 By Gabrielle Coppola and Shoshanna Solomon Oct. 23 (Bloomberg) -- The Tel Aviv Stock Exchange is expanding its campaign to win Israel’s inclusion in European stock benchmarks by targeting FTSE Group, the indexing arm of London Stock Exchange Group, Chief Executive Officer Yossi Beinart said. Beinart is lobbying both FTSE and MSCI Inc., whose gauges are tracked by investors managing about $12 trillion, in a bid to reverse a decline in trading volumes on Israel’s only bourse. He’s seeking to meet with MSCI representatives while he’s in New York this week and plans to reach out to FTSE, he said in an interview yesterday. “This is very high on our priority list,” Beinart said at Bloomberg headquarters in New York. “I’m not saying this is a given, but I think I must try. That’s my job.” Beinart, who took over as TASE’s chief in January, wants to lure back foreign investors to Israel’s $300 billion stock market after MSCI raised it to developed status in 2010. The move triggered a tumble in trading volumes on the exchange while initial public offerings have also declined. A record nine Israeli companies held IPOs in the U.S. this year. The TASE CEO said he wants to go on an “Israel roadshow” to make his case directly to investors who use MSCI and FTSE gauges. The bourse is also trying to end Sunday trading and move to a Monday-to-Friday schedule in order to align itself with market practices abroad and strengthen its case with the two index providers. Officials for London-based FTSE didn’t respond to requests for comment made after business hours. Lorena Sanchez, a spokeswoman for MSCI, declined to comment today in an e-mailed statement. MSCI’s Rejection Beinart’s asking for Israel to be included in MSCI’s Europe Index and the equivalent gauge at FTSE, arguing that the region is Israel’s most important trading partner. MSCI rejected Israel’s bid in June 2013. Then-TASE CEO Ester Levanon said at the time the move would bring as much as $2 billion of foreign capital. The TASE board endorsed the idea of revising the trading week and is now consulting its members on the logistics. Member banks and brokerages will also have to negotiate with unions over the change in working hours, said Beinart, who expects the process to take at least nine months. Beinart also wants MSCI and FTSE to reconsider the criteria they use for indexing stocks so that Israeli companies listed abroad, such as Check Point Software Technologies Ltd. And Mobileye NV, which both trade in New York, will be included in the Israel country gauge, boosting its weighting in world indexes. Double Weighting Israel’s weighting dropped to 0.2 percent on the MSCI World Index from 2.7 percent on the gauge for developing nations, data compiled by Bloomberg show. “Even if we get a doubling of our weight, we’ll be very happy, because that’s substantial,” Beinart said.
Four companies have joined the Tel Aviv exchange this year compared with a record 56 in 2007. To boost volumes and spur listings, the exchange is seeking a regulatory change to allow trading of local companies listed abroad. Trading volume on the TASE fell 44 percent from 2010 through the end of 2012, compared with an average 18 percent global decline, the Bank of Israel said in a March 2013 report. The benchmark TA-25 Index rallied 8.6 percent this year through yesterday, compared with a 4.3 percent gain in the Standard & Poor’s 500 Index, the gauge for U.S. equities. The index was little changed at 1,442.96 at 2:49 p.m. in Tel Aviv today. --With assistance from John Detrixhe in New York.