Tel Aviv Israel Stock Exchange Chairman Amnon Neubach & GBAC CEO Yusuf Azizullah discuss innovation
Tel Aviv Israel Stock Exchange
Chairman Amnon Neubach's Background - Served as economic adviser to former Prime Minister, Shimon Peres
Tel Aviv Israel Stock Exchange Chairman & GBAC-CEO:
Amnon. It’s my great pleasure being here.
Yusuf: Can you tell us a little bit about your background?
Amnon: OK, first I was born here. In Israel. I was raised here and all of my propelling my age is served in the military service. Then I study. BA economies in Berlin University, I wrote a thesis about how the war affected the economy, which was the time that was written was about the middle of the 17th. It was a big issue in his writing. During the time, the first day between 72 to 82. I was in the budget department in his run. So financially, it is a very strong unit that controls the old budget in the government, and I was in charge of the defense and the other part of government expenditure in ID 85 when Paris became a Prime Minister, he asked me to be his economic advisor and the major task. That we made it in time. Take care of the hyperinflation that we had in the country. Conan very comprehensive global. We succeeded to reduce inflation or close to 500% in the year to less than 16% in the first years and then step by step. It was reduced that during the beginning of the 20th, 2000 it became less than two to 3%, so it was a great success.
Tech in Israeli Economy
I think Tech has been the major locomotive or for the economy, it is the high tech and the contribution of it to our GDP. It’s Great as it is used in all areas and special about export and raising the standard of living. But it is only less than 15% of our employment.
Working in the high day so the government is trying to do something to check. During the Corona, the Cov1d19, there was a huge problem in the country in our country as well as in other countries yet, but in the last two to three years when the
COVID Vaccine Israel
the government succeeded to reduce it to a very, very low number because of the munition. Kobe Day Saints. OK, it doesn’t matter, but because. Anyway, so so as of today, the number of people suffering from COVID-19 is very low, and more than 5.5 million people are new. My day. It was 50. System The government provides to most people and today even the young people less than 12 years getting these indexing so.
Israeli NEW Govt - Election - Tech Nation
In more than two years of unstable government, because there was no. Really clear-cut voting for the people. It’s all the time on the edge. This time it is the first time after more than two years that were relatively stable. The new government, the experiment that it was on his chair in its position more than 12 years removed from his place.
I would say personally that I’m very happy about it and the new government is 7 from 7 fractions that each one of them has another agenda.
In this case, each one of them agreed to reduce the level of the ego and to reduce the level of ambition to implement what they declared that they would like to implement and try to find a compromise and to build a coalition that can provide a new area and a new regime.
In the government. Beginning it’s looking at not bad at all, but you know, time tell and the first really examination. The first obstacle, the first you know real challenge is the budget, and in the next 120 days, they need to bring the budget. For the next two years, and this is the real challenge of his government, and if they succeed to do it then I would say that we will have a government for the next few days. So I think for the beginning it’s not bad.
If you would like and can say you a word about Tel Aviv Stock Exchange, absolutely, please.
You brought in so many great points about the new government, about the new tech. You know, it is 15% fifteen percent of employment.
You know, as I said earlier. Also, you know, a lot of countries that are vaccinating faster are looking at the chance. So you really brought that point of covid vaccinations. And I’m really happy that you brought it up.
I didn’t even do ask you, but I do want to talk about the tech sector, even the prime. The new Prime Minister is an entrepreneur check entrepreneur. So this is a really massive, really good great push for the tech sector and with the new government, policies are coming up. They want to increase the public, the employments of the tech sector in the economy as you brought it 15% to a higher percentage.
Tel Aviv Stock Exchange History - CONFLICT OF INTEREST
OK, first about the Tel Aviv Stock Exchange. A few words about the background. Was established in 1953 by seven members, five points, and two brokers, and for many years it was a private company lying in a mutual private company. There are no shares. Remove when it’s like you know everybody has the same share, but some Members has more Rights, like the banks. Then the others and the maximum number of members of the board extended was about 24 members because in the past until the demutualization that is talking about it, there was no interest from the Member to have move member on the board because they would like to control theirs like a gilder.
That they would like to control and to have only the shares by each one of them. They don’t want to share with some other people. The piece of cake that they can help. Years ago the head of the Secutiries Regulatory Authority. Clear similar to what you have in the United States, he decided to change the old model of operation and two demutualizations of the Stock Exchange and then to provide it end to build the foundation, maybe even to go to IP to have an IPO. So the first step was to change the law in the second. Which took a long time because it’s needed to have the government end the parliament approval because of all of the Laws in Israel with regard to the capital market.
It is a highly regulated area. The whole question around the capital market is highly regulated. And the stock exchanges even more than this. So they passed the law. Then we indent started the idea we came to an agreement on how to allocate the shelves among the Members and how each one of them will get more as according to his contribution to the profit into the activity in the Stock Exchange in the last 25 years.
Is within located the share then it removes to the next step and we found some foreign investors but agreed to invest in the company and then then the next step was to go public and it was about maybe a year and nine months and the first day of the IPO. The price. Of the share, it was such seven, checking for one share today after maybe less than 20 months. It is about 22 Shekel in and one share so it is remarkably successful. And then end today.
We don’t have any conflict of interest around the board. The table of the bold because. None of the members is a member of the Stock Exchange can be a member of the company that holds. So there is a totally different separation between being a member of the Stock Exchange and you’re being someone that having a stock broker. this is separation changed dramatically.
Today we have. Three kinds of members. We have the local Members, then we have remote members and then we ever remember that I’m not a member of the Stock Exchange, but they cannot be a member of the Clearing House.
So we created few kinds of members of the Stock Exchange and Activity and each one of them can be a member according to this interest. And of course, according to the law. So this is a very important move ’cause nobody can you know. You don’t need all of the members to build a survival. Now about the high tech. Add in spite of the fact that the high tech industry new side, it was very successful row man and I’m sure that you have heard about many companies in television in Europe. Stock Exchange. And up till two years ago, it was not the house for the high tech. Two years following the huge effort by the CEO and the board of Director and we changed in about environment and today we have unbold close to 40 height. The companies in the Stock Exchange that array fun and now their trading. So this is under tooth really something. I’m seeing you for us. Moving to the end, if you have questions, let me know, but if not, I would say few words about the index that we have on Stock Exchange exist, yes? With many kinds of indexes like many other stock exchanges, but the major demand of them in his work, he called to love with 35, which is the biggest company that trading Italy. Then we have 1019 companies and then we have 125 degrees.
Will you say about the major indexes then?
Then we have many many indexes according to some subsectors, some of them about. Housing building high tech insurance so all come of indexes and if you would like I can send the list of other columns indexes and I think that each one of these in these indexes is open to the. Investor by this said it’s not chairs, but you know the paper. That form of the shirts. Some of the indexes. It’s really made multiple in the last two or three years, and so we’re very proud of this. Indexes and speaking about the high tech.
Tel Aviv Israel Stock Exchange
TASE UP - TECH IPO Platform
We create something which is new, we call it TASE UP, a little bit less regulated. Kind of platform to trade. It’s not exactly Stock Exchange, but it’s a platform for trading. The level of regulation that you need to show is relatively low, but then swore companies in high tech companies can raise the first seed of money. They don’t need to be big companies and they can do it relatively. Inlets, information, and less updating end data to the public. This is about our activity in Tel Aviv Stock Exchange.
The Abraham Accords
Let’s talk about the thing that recently happened in December. The Abrahamic records for the first time, Middle Eastern country, United Arab Emirates, and Bahrain have been moving towards diplomatic relations with Israel.
Many other Muslim countries are in the line to also recognize other than Emirates, Bahrain.
We have Morocco, Sudan coming up in the pipeline. So a lot of that new activity. A complete 365 degrees turnaround.
The world has changed and opened up to many new investors. So you’re one of the signers of the Abraham Accords from Israel.
I really appreciate your taking the time here to come here. Tell us how do you see this relationship now growing ’cause the Foreign Minister, alternate Prime Minister Yair Lapid is even traveling today o UAE.
This is one of the big major New ERA times, so this is absolutely we have more GCC countries in line to recognize Israel.
I think in the next 12-18 months moving towards recognizing Israel and this. How do you see this relationship?
Give us some comments on that. First. I don’t know. It’s not as scary anymore.
No, I don’t know if your know but the embassy of the Emirates (the Ambassador’s residence was a house in the Tel Aviv Stock Exchange Building from March 2021) and his position in the building of the Stock Exchange actually know that I saw him.
The reason why I said it? We should be meet. Coding today standard and regulation initial which is very close to the regulation in Europe and as in the United States. But this is this issue that is the Israeli Securities Regulatory authority.
I say they need to discuss and I think that they started. Already was there Emirates? Because without having disagreements and we cannot really establish a full platform of exchange. Really, you know, trading companies because we need this? Because this is the basic element. This is the foundation.
To make all kinds of trading, for example, where we have this kind of agreement with the United States. The European community, Singapore, Hong Kong so it be ’cause the regulator from all of these people signing agreement that we recognize each other. The regulation that is implemented in each part of this area.
For one and new, the people of our I said this is really secure. Authority they are at the beginning of a negotiation and I hope that very soon they will come. Go demand that we provide us the venues to continue to build a really.
I just the real system and you know we can talk about many issues, but in order really to build this kind of system we need at basic platform from the regulator, right? Design clearance. It is very, I think, that I made it loud and clear what needs to be done in order to build the overall system to exchange.
How when do you see that ten months, 18 months against in the ball 8 how fast with this move? And it’s not in your hands, and I understand that.
Transfer forms of course it’s not. I don’t know, but I’m going to check it with my colleagues and at the moment that I know something about it, I’ll let you know as if today we don’t know about the table because I don’t know. I don’t know if they start speaking about the details another already start to talk about it.
They will not confirm everything. Regulators and stop exchange. Like in the States, the European Community, as you brought up in Hong Kong, China.
Your opinion in next America. It’s on the same platform, so I think it would be the way you will join in the same platform sooner, later and then other countries, Bahrain. And then as we move ahead will follow the same trajectory.
Israeli Sustainability - Environmental Social and Governance ESG
Tel-Aviv Stock Exchange will itself be publishing its own Sustainability Report as bench mark and Guidance for listed and other companies to follow
Israel is very innovative in the deceleration of water and resources, so sustainability you during the code where you got clear created. The sustainability index is the cleantech and the fossil-free fuel. So talk about that. A little index and how is this approaching and where do you see this across in society and how is it helping Israeli citizens across the Pacific? And comment? Submit it on it, yeah.
Two different issues about this desalination. The CLEANTECH Index. You are.
In the last 10 years. Investing. 4 -5 desalination centers and today we supply. with regard to water that we have one company and one system that control all of the water in his. So all sorts of water on the ground and above the ground in the sea or whatever it is. It is under the. Control and set policy of the government that implemented by this company. So this number one so nobody can dig. Ground and to try to find water. Everything is under full control of the government and you have to pay full price for using the water. There is no subsidy not for housing and also having culture. It is very important to explain it because the whole system working on an economic system and justified by economic.
Reasons. #2, which is not less important, we have a system to purify the water management and as of today more than 75 or 80% of the world at the storage that came out of House Paul in Israel using there is a secondary user by the agriculture system. So for agriculture. Pump less and less water from the ground so we keep the exit farm relatively deleveled that we’re not. Financing with a shortage of water in the extra file so there is a balance between what we’re selling it and doing what we pump from the bond and what we’re using. So it is it is. Well established in STEM and today I think it’s about 800 million cubic water meter cool water that’s to climb the oil needs of the housing is and so all of this is a very important one. And of course the system that we develop is highly highly. Officiant and the cost for one week is not more than that. Same 60 or $0.65 per one week, so it’s relatively not expensive at all, and anything this is this about the water system vision. No, of course. The major part of things dissemination is the energy and and becauses, as you may know, we have guests in the middle terranean who gas is less expensive than oil. So the overall system, Italian officials. Speaker bold two no Clinton. It’s one of them who tried to failing to follow what is called cleantech and otherwise about the company either not using forcing energy or using another kind of energy which is beginning. I don’t think that we have enough experience. I know this is there is a lot of demand, but I think that we need some time to see how it will go. Further, there is, and why I cannot say something that definitely it’s a great success. I know think about cleantech. There was a lot of interest in the second one. It now A kind of buzz, but I don’t think that it’s a great success but it is moving ahead. Let’s look at this because it’s an all-into company that including indexes and not all of the companies are deleveled really supplied or really provide within. But it is in the process.
You know, we believe that in the future we will have some more companies and more indexes or real round Environmental Social and Governance ESG. So this is just the beginning.
Thank you for commenting on that, because, you know, pressing the US, the BlackRock, the largest asset managers vanguard states, you been all pushing for environmental, social, and governance ESG and sustainability on BOARDROOMS.
Glad that we have the indexes and you know, there are companies that are going to be moving up into the CRITERIA.
I think this is one of the areas there is an opportunity for growth. I think is an Israeli market.
Personally, when I’m looking across my friends in Europe and the US and you know from the planet where advised bold his heels, I think there’s an opportunity for increasing sustainability knowledge. Sharing with the listed members and with the CEOs, how they can transition into sustainability. I think these are some of the points. Budgeting may be and deeper dive focus would be better conversations. Do you have one opportunity where is market getting improved liquidity from investors?
talk about the environment, social and governance that we trying in our Stock Exchange to try to work on it and to believe that the governance and all of the question
how you run the company and what is your responsibility from the environment for the ecology.
It is very important. Which lie in our regulator tried to bring some kind of system that voluntarily, each one of the company would report about it. It is not mandatory yet. I’m not sure that it will be mandatory, but it’s voluntary.
We start step by step and you are going to be among the first company that we’re going to do. We’re going to report about this to be some kind of faith leader. To provide an example about what we’re doing in order to improve.
So spring about the Stock Exchange future. Will. Challenge that in the next five to seven years. But most of the Stock Exchange in the world is going to face it is the all of the derivative and all of them in all of them. Implementation of the black joy election blockchain technology with everything around because two-day clearinghouse using relatively old technology.
It is from the 90s and the beginning of this million years ago. Change is something that really changes everything. It is a little bit premature. This technology’s quite premature.
It is not the speed of the technology. It’s not good enough for trading, but it’s very good for all of the back offices and it’s very good first for clearance.
Is and now is. Did central banks in the world grind to adapt it? Digital currency looked but it the digital currency of the state, not like Bitcoin. Add row and skin about like you know, U.S. dollar digital used, oral Israeli shekel, digital.
At the moment they will introduce this. Money which exchanges the old money or the regular Fiat money. Is going to be something that will change the old memory.
Now I can tell you one thing, that the moment that is going to be. Digital shaker or digital dollar, whatever it is, all of the clear house has to change the old mode of operation particles. You don’t need all of them you know the banks or all of the players among the cocktail day, you know the retail or the investment banker.
Whatever it is, you don’t need all of them. It can be directly from peer to peer with no intervention so. If you ask me, it’s going to be open tomorrow morning. I don’t know, but what I do know that technology is going to be the leader. That the leader of the changes in the next five to seven years, and I know that in our Stock Exchange we are going to work very hard to understand. What the digitization? How all of this new technology and a new system which can be blockchain? It can be another technique that doesn’t matter, but it’s going to be something you now which will affect that all stock exchanges in the world and all of the finance business. In the world, so it’s maybe 5 to 7 years, but ten years from today I get the feeling that we’re going to see another monitor system. Not, I’m not talking not about Bitcoin, not about it. Remove because they are not going to be the regular form current regular currency and talk about the dollar, the euro, the shekel, maybe each one of the state.
This is my belief. I absolutely agree with you, but three things I want to address here. One, absolutely this is disrupted in two cents. Once you know I’ve been working with the many I work with many sustainable stock exchanges CEOs across the planet
I’ve said this to developing countries. Whoever implements blockchain. Developing countries and emerging markets have a real advantage to move towards. outdoing developed countries’ emerging markets will outpace the developed markets if they implement this very successfully.