All New Index Methodology is Underway

 

 
 

Omer regev
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28/01/2016

  • The all new index methodology measures will improve its stability and reduce concentration.

  • Stringent criteria will apply to flagship indices.

  • Indices to include only Israeli Oriented companies
Tel Aviv Stock Exchange, January 27th, 2016 – in the last six months the Tel Aviv Stock Exchange introduced an all new index methodology principles of equity indices and held an intensive dialogue with a wide range of capital market activists. Exchange staff held discussions in small groups with over 100 representative from over 40 organizations to formulate a common and practicable all new index methodology measures.

The majority of market activists welcomed and applaud the proposed methodology. Most activist's recommendations have been adopted.

The detailed methodology rules will be published on TASE website for public comments starting January 27th, 2016 until February 10th, 2016, and afterwards will be brought to the Board of Directors for approval. The public document detail, among others things, the considerations and reasons for the proposed changes.

The new methodology shall improve indices stability and significantly reduce the risk of index-trackers and investors, who manage directly NIS35 billion in TASE indices. The move, when approved, will be implemented gradually by 12 steps, every month, over a course of a year.

Objectives for the New Methodology
  • Reduce market concentration

  • Reduce the risk to index trackers resulting from the influence of complex corporate actions

  • Reduce the "Index Effect" phenomenon (the indices updates effect on the market)

  • Encourage foreign investment in TASE indices

  • Significantly increase in free float of shares included in flagship indices

  • Maximize the potential of the SME shares listed on TASE

  • Strengthen a clear Israeli identity in TASE Indices

  • Differentiation between existing indices and improve the infrastructure to launch a new set of indices

What exactly are we doing?

Reducing Index Concentration – a reduction of index concentration is achieved by implementing a low weight cap with a combination of increasing number of participating shares in each index. The full list of indices detailed in Appendix A attached hereto.

Launch of "Sub-Universe" called "Rimon" - The Rimon universe will include the shares that meet stiff index criteria (180 shares). Establishing the Rimon universe was intended to strengthen and improve the TASE's flagship indices, so that Rimon Indices can be used as an underlying asset for derivatives.

Rimon Indices will include the following indices:  TA-35, TA-35 Net Dollar, TA-90, TA-125, TA-5 Banks, TA BlueChip15Price and TA-Rimon.

Enlarging the existing universe "Tamar" - Tamar will be a "home" for all shares eligible to be included in the indices (about 320 shares), including shares that match the "growth indices" criteria. The "growth indices" are characterized by a wide range of shares and low weight cap, which improves the index diversity. Out-off the Tamar Universe the Tamar Indices series will be derived, which could be used as an underlying asset for index-tracking products.

Tamar Indices will include the following indices:  TA All-Share, TA-Growth, and several Sectorial indices.

"Season" Period of Newly Listed Shares - a newly listed share will be traded between 7 to 12 weeks before its addition to TASE Indices. Large cap stocks shall to be added in a gradual process of controlled measures.

Comprehensive Methodology Upgrade – the all new index methodology was developed based on the experience gained and based on recognition of the latest market needs. The full rules are listed in the document presented for public comments.

Maintaining Israeli identity in TASE Indices – Israeli Orientation criteria was formed last November, after an extensive examination best practices used worldwide index providers to define a local connection. Characterization of an Israeli Orientated share has been refined and clarified in order to ensure true affinity to Israel.

Israeli Orientation Policy in TASE Indices:
- Existing Indices (with the exception of BlueTech Index) - only shares with a clear Israeli Orientation will be added to TASE Indices. Foreign shares already listed in TASE, that will be deleted out-off TASE indices, will not be allowed to return back to TASE Indices. TA BlueChip15Price Index will include only shares incorporated and domiciled in Israel.

- Launching a series of "Global indices" – a new set of Global Indices with no Israeli Orientation will be introduced at a later stage.  

Launch of New Indices (launch dates will be determined on a later stage)

  • TA BlueChip15Price - price index developed specifically according to the needs of foreign investors. The Index will include 15 Blue Chip shares, subject to the stringent sectorial criteria.

  • TA-SME150 - index "backbone" will include 150 medium-sized Israeli shares included in the TA-90 (formerly known as TA-75) and TA-SME60 (formerly known as MidCap-50).
  • TA-Rimon - a new market cap index that will include Rimon Universe shares (180 shares).

Encouraging foreign investors - index updates will be occur during overlap days when TASE and New York Exchanges fully operated.

Appendix
New Indices Structure

 

Old Index

New Index

Number of Constituents

New Wight Cap

1

TA-25

TA-35

35

7%

2

TA-100

TA-125

125

4%

3

TA-75

TA-90

90

2%

4

TA-MidCap50

TA-SME60

60

2%

5

TA-MidCap

TA-Growth

135 +/-

2%

6

TA-Composite

TA-AllShare

320 +/-

0.5%

7

TA-Finance

TA-Finance

25 +/-

10%

8

TA-Banks

TA Banks-5

5

33%

9

TA-Insurance

TA-Insurance Plus

16 +/-

15%

10

TA-BlueTech

TA-BlueTech Global

80 +/-

2%

11

TA-TechElite

TA-TechElite

40 +/-

4%

12

TA-Technology

TA-Technology

50 +/-

4%

13

TA-Biomed

TA-Biomed

30 +/-

4%

14

TA-Oil & Gas

TA-Oil & Gas

12 +/-

15%

15

TA Real Estate-15

TA-Real Estate

65+/-

2%

16

TA-Comm

TA Comm & IT

21 +/-

10%

17

TA-Maala

TA-Maala

30 +/-

4%

18

Tel-Div

Tel-Div

35+/-

EW

19

New

BlueChip15Price

15

EW

20

New

TA-SME150

150

EW

21

New

TA-Rimon

200+/-

1%



הנתונים, המידע, הדעות והתחזיות המתפרסמות באתר זה מסופקים כשרות לגולשים. אין לראות בהם המלצה או תחליף לשיקול דעתו העצמאי של הקורא, או הצעה או שיווק השקעות או ייעוץ השקעות ב: קרנות נאמנות, תעודות סל, קופות גמל, קרנות פנסיה, קרנות השתלמות או כל נייר ערך אחר או נדל"ן– בין באופן כללי ובין בהתחשב בנתונים ובצרכים המיוחדים של כל קורא – לרכישה ו/או ביצוע השקעות ו/או פעולות או עסקאות כלשהן. במידע עלולות ליפול טעויות ועשויים לחול בו שינויי שוק ושינויים אחרים. כמו כן עלולות להתגלות סטיות בין התחזיות המובאות בסקירה זו לתוצאות בפועל. לכותב עשוי להיות עניין אישי במאמר זה, לרבות החזקה ו/או ביצוע עסקה עבור עצמו ו/או עבור אחרים בניירות ערך ו/או במוצרים פיננסיים אחרים הנזכרים במסמך זה. הכותב עשוי להימצא בניגוד עניינים. פאנדר אינה מתחייבת להודיע לקוראים בדרך כלשהי על שינויים כאמור, מראש או בדיעבד. פאנדר לא תהיה אחראית בכל צורה שהיא לנזק או הפסד שיגרמו משימוש במאמר/ראיון זה, אם יגרמו, ואינה מתחייבת כי שימוש במידע זה עשוי ליצור רווחים בידי המשתמש.