The TASE Board of Directors decided to upgrade the stock exchange indices to confirm with international standards by changing the method of weighing stocks on the index. Instead of weighing them according to market capitalization, as is the practice today, the weighing will be on the basis of public holdings of stock ("free float"). In addition, stock weighing will be updated quarterly; the decision is expected to be enacted at the beginning of 2008.
As of January 1, 2008, stock in the index will be weighed on the basis of the value of public holdings (and not according to the overall market capitalization of the stock), in keeping with the practices of leading indices around the world. Nevertheless, the selection of stock for inclusion in the index will continue to be based on the overall value of the stock.
Furthermore, the process of updating the number of a company's shares for the purpose of calculating its weight in the index will be carried out every quarter and not on a daily basis, except in special cases where major changes in the amount of stock have occurred. It should be noted that daily updating of the number of shares is not the usual practice in stock exchanges around the world as it causes operational difficulties for those who track securities indices.
Ester Levanon, CEO of the TASE said: “Adopting TASE indices to international standards will make the Israeli market more accessible to foreign investors”.
“In addition, changing the method of weighing will encourage the companies to take action to increase public holdings of stock; Note that, this change is in keeping with TASE’s ongoing measures designed to increase the free float on TASE”. Added Dror Shalit, Senior Vice President, Head of Trading & Clearing Department.