How to become TASE Remote Member. Concise Guide

Transcription

1 How to become TASE Remote Member Concise Guide

2 November, 2015 Table of Contents Page About TASE 3 Rules Governing a Remote Member on TASE 5 TASE Clearing Requirements of a Remote Member 8 Trading commissions on the Stock Exchange and its clearing system 10 TASE Trading and Back Office Technology Requirements 12 Application for Admittance as a Remote Member of Stock Exchange 19 Major Banks, Members of TACH & MAOF CH Members 26 Chapter Four "A": Transactions of an Exchange Member Who is not a Maof Clearing House Member 27 2

3 About TASE Founded in 1953, the Tel-Aviv Stock Exchange ("TASE") is the heart of Israel's dynamic economy. With the globalization of financial services, the scope of TASE's international activity and its global footprint have grown over the years. Israel is a member of the Organization for Economic Co-operation and Development (OECD) and its capital market is categorized as a "developed market" by all major international index firms. Israel's robust economy, excellence in technology industries, and advanced capital market infrastructure renders TASE a prime venue for international investment. International investors can diversify their portfolio by investing in TASE-traded securities, including stocks, bonds, ETN's, options and futures, convertible securities and T-bills (MAKAM). TASE is a "one stop shop" for the trading of securities and other financial assets in Israel. It operates a fully automated, real-time, order-driven trading system. Its sophisticated information systems disseminate market data, making the market transparent and readily available to investors worldwide. Safety mechanisms such as price monitoring and circuit breakers are integrated into the trading system, in order to mitigate risk while maintaining liquidity. In addition, directly and through its subsidiaries TASE offers a full range of market services, including clearing and settlement, data vending services and calculation of indices. TASE is mutually owned by its members. Investor Protection TASE places great importance on market integrity and investor protection. Israel s securities laws are comparable to those governing U.S. and E.U. securities markets. TASE is a regulated exchange as well as a self-regulating organization (SRO). Its rules and regulations are designed to ensure transparent, fair and orderly trade as well as the financial and operational stability of its clearing houses. The Bank of Israel supervises TASE s bank members. Non-bank members are supervised by TASE s Membership & Supervision Department. The Israel Securities Authority ("ISA"), a signatory to the IOSCO Multilateral Memorandum of Understanding, is charged with the ongoing supervision of TASE. Over the years, ISA has built a highly credible and effective regulatory infrastructure, creating a stable environment for international investment. TASE Members There are 24 TASE members - 14 banks and 10 investment houses. Citibank, HSBC, Barclays, Merrill Lynch International (remote member), as well as subsidiaries of Deutsche Bank, UBS and Citigroup are among TASE members. Renowned for their professionalism and standards of services, TASE members serve the community of local and international investors in Israel's growing market. 3

4 Remote Membership TASE permits international financial institutions, which have no permanent representation in Israel, to become "remote members" of the TASE. International banks and investment houses with equity of at least one billion dollars* are entitled to apply for remote membership. They must be members of a stock exchange in their home countries and be members with at least ten-year seniority in one or more of the following exchanges: London Stock Exchange, NYSE Euronext, Deutsche Börse, Eurex (Germany), SWX Swiss Exchange or Tokyo Stock Exchange. TASE Management Amnon Neubach - Chairman of the Board of Directors Yossi Beinart - Chief Executive Officer Igal Bareket - Senior Vice President, Chief Marketing Officer Adi Barkan - Senior Vice President, Head of TASE Clearing House Aya Ben David Ashbel - Senior Vice President, General Counsel and Head of the Legal Department David Deri - Senior Vice President, Administration & Finance Department manager Eldad Hershtig - Senior Vice President, CIO, IT & Operations Department Robby Goldenberg - Senior Vice President, Head of Trading, Derivatives & Indices Department Gal Landau-Yaari - Senior Vice President, Chief Risk Officer Sraya Orgad - Senior Vice President, Strategy & Business Department Hani Shitrit Bach - Senior Vice President, Head of Listing & Economics Department TASE Online - Market Data & Information - The TASE website ( offers extensive market data alongside important information on Israel's capital markets. The site main feature is a friendly and comprehensive presentation in English and Hebrew of trading data, both current and historic. An in-depth description of all the products traded on the TASE is provided for the convenience of users. All the information at the web site is free of charge. Contacting the TASE Address 2 Ahuzat Bayit St., POB 29060, Tel Aviv Israel Tel Fax lilachbd@tase.co.il Website *This requirement is in discussion for reducing in the near future 4

5 Rules Governing a Remote Member on TASE Summary The terms and conditions are detailed comprehensively in the relevant Rules which are available at the TASE website: A remote member is a bank or international investment house (I) that was incorporated outside Israel in one of the following countries: the United States, the U.K., Germany, Switzerland, Japan, Canada, Austria, France, Norway, Holland, Sweden, Denmark, Finland, Belgium and Australia, (II) does not have a permanent representation or branch in Israel, (III) operates as a stock exchange member in the country in which it was incorporated. 1. Main Qualification Terms and Conditions The main qualification conditions for stock exchange membership for a remote member are as follows: It has been a stock exchange member for at least 10 years, of one or more of the following stock exchanges: LSE (London), NYSE EURONEXT, DEUTSCHE BORSE, EUREX (Germany), SWX (Switzerland), TSE (Tokyo). It is supervised by the authority competent to supervise securities activity in the country in which it was incorporated and by the authorities competent to supervise securities activity in other countries in which it operates and from which it is applying to operate on the TASE (each of these authorities are hereinafter referred to as the competent authority ). The competent authority in the country in which the remote member was incorporated and the competent authority in at least one of the countries in which it has operated as a stock exchange member for at least 10 years, must have a cooperation agreement with ISA. It operates on TASE, only from those countries in which the competent authority has a cooperation agreement with ISA, or from countries in respect of which ISA has given notice, that so far as it is concerned, there is no impediment to its admission to TASE as a remote member operating from them. It has received written confirmation from the competent authority in the country in which it was incorporated and from the competent authorities in the countries from which it intends operating on TASE. The written confirmation must verify that it is under the competent authorities' supervision and that the competent authorities have no objection to its being a remote member of TASE. It has, at all times, minimum equity of at least one billion dollars (US)*. It has duly insured itself with adequate insurance including its activity on TASE. *This requirement is in discussion for reducing in the near future 5

6 It has appointed a senior manager, who shall be responsible for its activity on TASE. It has appointed a person in Israel who shall be authorized to accept court documents and notices on its behalf. It has mechanisms, means, computer systems and professional personnel enabling its proper activity on TASE and the performance of its duties to its customers, TASE and TASE members. TASE Board of Directors may, at its discretion, stipulate additional qualification terms and conditions for a remote member in addition to those set forth in the Rules. 2. Governance, Supervision and Reporting A remote member shall not be a member of the Tel Aviv Stock Exchange Clearing House Ltd (hereinafter referred to as "TASECH") and shall not be a member of the MAOF Clearing House Ltd (the derivatives clearing house, hereinafter referred to as "MAOF CH"). A remote member shall have a securities clearing agreement with a member of TASECH. A remote member operating on the derivatives market shall have a derivatives clearing agreement with a member of the MAOF CH. A remote member shall undertake to furnish ISA with all the information required by it in connection with its activity on TASE. A remote member shall allow TASE to supervise its activity on TASE and its compliance with TASE Rules and shall assist it insofar as necessary. A remote member shall file with TASE, each year, financial statements and a full annual report, within seven days of their approval. A remote member shall include a provision in its contracts with its customers who are active on TASE, allowing it to give TASE and ISA any information regarding their activity on TASE. A remote member shall be governed by the provisions of TASE Rules governing TASE members that are banking corporations which are registered companies, mutatis mutandis, with the changes detailed above and below. 3. Membership Fee, Annual Fees and Handling Fees The membership fee is about NIS 530,000 plus VAT. The application handling fee is about NIS 53,000 plus VAT. The member shall pay, each year, by the end of January, an annual fee of NIS 100,000 plus VAT. Where the amount of the clearing and trading commissions paid by a member to TASE in the year preceding the payment date exceeded NIS 100,000 before VAT, the member shall be exempt from paying the fee as aforesaid. Where a member paid clearing and trading commission as aforesaid in an amount of less than NIS 100,000 before VAT, it shall be liable to pay only the difference between NIS 100,000 and the amount of the commissions paid by it plus VAT. 6

7 4. Application for admittance as a Remote Member of TASE A form of the application for admittance as a remote member of TASE is annexed hereto (appendix "A" - page 19). 7

8 TASE Clearing Requirements of a Remote Member 1. General Clearing and settlement at TASE is conducted as follows: A. Shares, Bonds, Israeli T-bills, ETF s warrants, mutual fund units etc. are cleared and settled by TASECH. B. Derivatives - Options and Futures - are cleared by MAOF CH. According to TASE Regulations, a Remote Member cannot be a member of the TASECH and cannot be a member of the MAOF CH. A Remote member must nominate one of the TASECH members, or the MAOF CH members, as a General Clearing Member ("GCM") that will provide it with clearing services. A list of the major banks, members of TASECH and MAOF CH that may act as GCM is annexed hereto (appendix "B" - page 26). 2. The Tel Aviv Stock Exchange Clearing House Ltd. A Remote Member operating with a GCM can operate in two ways: A. As a part of the GCM's general account, without segregation between the Remote Member's securities and the GCM. B. Through an Additional Customer Subsidiary Account which separates the remote member's securities from the GCM's securities. Annual handling fees for an Additional Customer Subsidiary Account are approx. NIS 32,000 plus VAT (to be paid by the GCM). A Remote Member must furnish TASECH with an undertaking to comply with the by-laws of the Clearing House. A GCM must furnish TASECH with an undertaking of the GCM in respect of the Remote Member's transactions and/or clearing activities". 8

9 3. The MAOF Clearing House Ltd. (The Derivatives Clearing House) A Remote Member that only trades in securities shall inform TASE that it does not trade in derivatives. A Remote Member that trades on the derivatives market: A. Shall sign a clearing agreement with a GCM. The clearing agreement shall define the relations between the Remote Member and the GCM and shall include everything stated in section 4 of chapter 4a of the MAOF CH by-laws. As part of the clearing agreement the GCM will set the maximum margin within the framework of which the Remote Member may act in derivatives traded on TASE. Chapter 4a of the MAOF CH by-laws annexed hereto (appendix "C" - page 27). The GCM shall furnish the MAOF CH with an undertaking in respect of the transactions and obligations of the remote member. B. Shall furnish the MAOF CH with a list of nominated executives who are authorized by it to clear back office transactions. The handling fee for a Remote Member application to commence as a member who is not MAOF CH member is approx. NIS 28,000 plus VAT. 9

10 Trading commissions on the Stock Exchange and its clearing system* (From each side to a transaction) Commission Shares, securities convertible into shares, rights and ETFs governed by the same trading rules that apply to shares Minimum Maximum Bonds - "Shahar", NIS denominated government bonds and short-term government bonds Other government bonds Minimum Maximum Minimum Maximum Bonds securities convertible into certificates and ETFs governed by the same trading rules that apply to certificates Treasury bills Commercial securities Minimum Maximum Minimum Maximum Minimum Maximum Option on the TA-25 Index, futures contracts on the TA-25 index, Option on the TA- 100 index, futures contracts on the TA-100 index Equity option, option on the TA-Banks Index, and futures contract on TA-banks index, Option on unlinked Government bonds ("shahar") Option on the NIS/ US dollar rate, exchange futures NIS/ USD rate, option of the NIS/ Euro rate, futures contract on the NIS/ Euro rate % NIS 0.01 NIS 1, % NIS 0.01 NIS 1, % NIS 0.01 NIS 1, % NIS 0.01 NIS 1, % NIS 0.01 NIS 1, % NIS 0.01 NIS 1,000 NIS 0.29 NIS 0.50 NIS 0.18 * The trading commission constitutes the consideration for the trading services, the clearing services and the reports ancillary thereto, which TASE provides for the members as well as mail boxes, non-recurring connection fees to the "300 line" and the minimum monthly payment for routine trading data. 10

11 Notwithstanding the provisions of section 3 of the Regulations, the trading and clearing commission on options and futures contracts, which are detailed in this section, will not be linked to the index. The Board of Directors may determine that trading and clearing commission will not be charged on one or more types of derivatives or that the amounts charged on one or more types of derivatives will be lower than the amounts detailed above. At least three days' notice will be published to TASE members of a decision to once again charge commission as provided above. 11

12 TASE Trading and Back Office Technology Requirements 1. General This document describes the principles of the trading system at TASE for both equities and derivatives markets and the different alternatives to trade on the TACT (Tel-Aviv Continuous Trading) platform. Both the equities and derivatives markets require a separate logical connection. Both connections can use the same communication infrastructure. The document also describes the variety of daily reports that cover every aspect of Back Office services for the clearing members. 2. Connecting TASE for trading All TASE members are connected to the TACT platform by direct connections (CTCI - Computer to Computer Interface) between the member s Trading Computer and the TACT trading system. TASE implements a proprietary protocol for this connection and supports also order entry via FIX 5.0 protocol. Only TASE members are allowed to have a direct access to the trading platform. A member can have several CTCI connections. The real time Market Data feed is disseminated via a separate connection that implements a proprietary protocol. FIX/FAST 5.0 protocol is also supported for the real time market data feed. In order to implement the CTCI connection to the TACT platform (the DMA access) all members as well as remote members may choose the following solutions: Developing in-house order routing software for connecting TACT and for receiving Market Data feed, that implements TACT proprietary API's. Developing order entry connectivity via FIX 5.0 protocol and market data connectivity via FIX/FAST 5.0 protocol. Buying a solution from an Independent Software Vendor (ISV) for trading on TASE and for the Market Data feed. Currently there are several ISV s in Israel and 3 foreign ISV s: ION Trading Ltd, List Group SPA and SunGard. The existing ISV solutions, except SunGard, are used by the local offices of TASE's members. 12

13 The SunGard solution is implemented as an ASP platform. It allows DMA access for remote members or remote clients of TASE's members using the GLNET communication network. The ASP platform is installed in TASE's premises and maintained by SunGard. The clearing member or a local member's office has access to the platform in order to maintain risk management parameters. Real time market data feed can be obtained from a number of vendors licensed to distribute TASE data (including Reuters, Bloomberg, Data Stream). A remote client of TASE's local member can trade on TASE using the members system instead of the SunGard solution for DMA. In this case the client will be connected first to the local member system and through it directly to the exchange. 13

14 Options for connecting TASE's trading platform Remote member or client system Remote member Remote member or client system Remote traders Remote traders Remote traders Local traders Local traders Local traders Local member s system Local order routing system SunGard ASP Platform TASE Trading system 14

15 A. The TACT Trading System The TACT trading system is a daily system. It receives all data for securities and derivatives from the Back Office system at the beginning of the trading day and transfers all data created during the trading back to the Back Office system at the end of the trading day. The settlement and clearing systems run on the Back Office system. They receive the data from the trading systems at the end of each trading day. The TACT API has two parts: one part allows connecting the trading system to send orders and to receive order/trade confirmations (the TACT CTCI API); another part allows receiving real time market data (the TACT Data Dissemination API). The TACT CTCI API implements proprietary communication protocol between the TACT trading system and members trading computers via TCP/IP connections. In addition to the API implementation the member must develop the software that creates order messages to TASE and receives order and trade confirmation messages from TASE in a proprietary format. Members can receive real time market data feed using the direct connection to the TASE data dissemination system via TCP/IP. The TACT Data Dissemination API implements the proprietary communication protocol between the TASE data dissemination system and the members' systems. In addition to the API implementation, the member must develop an application for receiving the data dissemination feed messages in a proprietary format. TACT trading system supports also FIX 5.0 protocol for order entry and FIX/FAST 5.0 for real time Market Data feed. TASE publishes at the end of each trading day the securities and derivatives lists that will be traded on the next trading day. The publication is carried out by the TASE Back Office Network. TASE maintains a separate network between the Stock Exchange and members sites for file transfer purposes. Currently it is used only by local Israeli members. The securities and derivatives lists and the reference data are also published during the Start-of-day Market Data dissemination at the beginning of the trading day. It is possible to upload the list of all securities from TASE's web site. B. The Test Environment TASE has a separate test environment. The equities and derivatives markets run on separate test computers using test symbols and stock/derivative test id-numbers. All TASE members use the test environment simultaneously. The test network uses separate communication lines and equipment. Remote Members, whose trading systems are outside Israel, can connect to the test environment via Internet using a VPN connection. A Production Market data dissemination test feed may be received via Internet connection. 15

16 C. The Back-up Site TASE has a back-up site outside Tel-Aviv. The back-up site is a cold back-up and can be in production in a few hours. The back-up site also includes the TASECH and the MAOF CH. The communication node in the back-up site is a production node and each member is connected to this node. In case TASE would decide to activate the back-up site, the members would already be connected. D. The Production Trading Network 1. Communication lines Each member s CTCI site is connected to the TASE trading system by two leased lines. One line connects the member site directly to the Stock Exchange in Tel-Aviv and another first to TASE s communication node in the backup site and then to the main site of TACT in Tel-Aviv. Remote members are connected to TASE via two leased lines with capacity of 2MB on the local segment and two international lines from our international supplier. This supplier is responsible for installing local lines abroad, according to agreements with local suppliers there. Members or their clients using the SunGard ASP solution are connected via the GLNET communication network. BT Radianz is currently connected to TASE and provides the infrastructure to connect TASE's trading platform via its international network. TASE members receive market data dissemination in real time via the same lines as for the CTCI connection. The members can connect their DR sites to TASE s DR site using a separate leased line. 2. Hardware Installation and Maintenance TASE orders international lines for remote members and coordinates their installation. TASE maintains the network, including configuration of routers onthe member s site. TASE publishes specifications for routers on member sites. Remote members should purchase them and install them at their premises according to the specifications. The prices for the international leased lines depend on the member site location. There is a onetime installation fee and monthly fees for local and international lines. Members that are using the SunGard solution and GLNET infrastructure instead of the leased line connections have an annual communication fee. 16

17 3. TASE Back Office Services The services are for Clearing House members only. Remote members can't be members of TASECH and should use the services of TASECH members. A. General TASE offers on a daily basis a variety of reports that cover every aspect of its back office services. The reports are published via the Back Office IP/VPN network. The reports are divided into several sections: TACT trading results securities prices and traded volumes, Indices, Futures and Options trading summaries, etc. TACT and MTS trades confirmation end-of-day summary of TACT (securities and futures) and MTS (bonds) activities. Clearing and settlement reports for securities and derivatives pending and settled reports, collateral management, evaluated report, cash reports, corporate action and cash payments reports etc. Securities and Futures index details of TASE securities and futures. Other reports designated reports for different purposes. B. TASE Data File Structure TASE reports are published as ASCII batch files in a dedicated format. TASE uses a standard file structure in all reports it publishes. This structure allows the receiver to develop the same flow for all received files. Each file structure is documented and will be issued upon request C. FTP Software TASE uses guaranteed FTP software that ensures delivery and reception of the published files. TASE FTP servers receive the reports from the various back office systems and send them to the member. In the same way the TASE server downloads files from the member and transfers them to TASE. All members wishing to receive reports from TASE must install an FTP client on their FTP machine. The TASE server will establish connection only with these clients. TASE uses REPLIWEB B-HUB FTP software. More details can be viewed at The client/member is responsible for setting the relevant parameters in the FTP client in its own FTP machine. 17

18 D. TASE Back Office IP/VPN Network TASE uses a private IP/VPN network for its members in ISRAEL, which is supported by the local PTT (BEZEQ). TASE supplies the communication lines and routers, and is responsible for installing lines at the customer s premises. TASE is responsible for maintenance of the equipment and lines. The client/member is responsible for supplying any other required hardware like FW, FTP machine, switches etc. TASE basic installations include 2 IP/VPN lines and 2 routers that back each other up and ensure high availability for connecting to the TASE main site and to the TASE DR site. Customers that would like to receive files outside of Israel should contact TASE in order to discuss the preferred communication method. E. TASE Back Office Network Customer Type TASE Back Office Member type defines the files that this member can receive from TASE. The member types are: TASE Member TASE Members can receive TACT trading results, TACT and MTS trade confirmations and the Securities and Futures index. TASE Members with an identified account at TASE Central Securities Depositary (CSD) can also receive clearing and settlement reports if such is approved by its Custodian. TASE CSD members can receive all reports. 18

19 Appendix "A" To The Tel Aviv Stock Exchange Ltd 2 Ahuzat Bayit St. Tel Aviv Date: Application for Admittance as Remote Member of Stock Exchange 1. We (name of applicant/s) (hereinafter referred to as the Company ), whose address is, that is incorporated and operates in as a stock exchange member, hereby apply for admittance as a member of the Tel Aviv Stock Exchange Ltd (hereinafter referred to as the Stock Exchange ). Annexed hereto is a copy of the documents pursuant whereto the Company is incorporated and operates (as required under the laws of the country in which it was incorporated), including its articles of association, if existing. 2. The Company s long-term rating according to S&P, is: and/or according to Moody s: and/or according to Fitch: (delete the inapplicable). 3. The Company has operated as a stock exchange member for at least 10 years on the following stock exchanges: 4. We intend operating on the Stock Exchange from our offices in the following countries: 19

20 5. The competent authorities, within the meaning thereof in the Rules, which supervise the Company s activity in the country in which it is incorporated and operates as a stock exchange member, and in the countries from which the Company intends operating on the Stock Exchange, as set forth in subparagraph 4. above, are: Country Supervisory authorities Annexed hereto is confirmation from the competent authorities that the Company is under their supervision and that they have no objection to the Company being a remote member of the Stock Exchange. 6. We undertake to apply for the approval of the Stock Exchange s Board of Directors before commencing activity on the Stock Exchange from offices of the Company that are located in a country that is not noted in this application and to annex to the application the approval that we receive from the competent authorities in this country. 7. We declare that we have studied the Stock Exchange s memorandum and articles of association, as well as the Stock Exchange Rules, Regulations and Temporary Regulations, and that we are familiar with the resolutions of the Stock Exchange s Board of Directors governing Stock Exchange members. 8. If we are admitted as a remote member, we undertake to comply with the provisions and conditions of the Stock Exchange s memorandum and articles of association, the Stock Exchange Rules, Regulations and Temporary Regulations (hereinafter referred to as the Regulations ) and the resolutions of the Stock Exchange s Board of Directors, as shall be from time to time. 9. a. We are annexing a copy of the Company s last financial statements that were filed with the authorities and a copy of the last full annual statement that the Company filed with the competent authorities in the country in which it was incorporated as a company and in which it operates, including all the ancillary statements and appendices that the Company is obliged to file. 20

21 b. We undertake to furnish the Stock Exchange, each year, with a copy of the annual statement, in the format that we file with the aforesaid authorities. 1) We are not required to file quarterly statements or half-yearly statements with the aforesaid authorities. or: 2) We undertake to furnish the Stock Exchange with copies of the quarterly statements or half-yearly statements that we file with the aforesaid authorities, within seven days of their approval. 10. The Company s equity is. 11. Details of the insurance policy under which the Company is insured are. 12. The members of the Company s board of directors are: Name Address Principal Engagement 13. The interested parties in the Company, directly and indirectly, are: Name Shareholders (class, nominal value and quantity) Percentage holdings 21

22 14. The Company s controlling shareholders, directly and indirectly, are: Name Principal Engagement Percentage holdings 15. The name and contact details of the senior manager who shall be responsible on the Company s behalf for its activity on the Stock Exchange are as follows: The senior manager s name: Address: Telephone: Facsimile: We undertake to notify the Stock Exchange in writing of any change in the identity and contact details of the senior manager, within one day of the change. Notice of retirement as aforesaid shall include details of the circumstances of the retirement, and shall detail, to the best of the Company s knowledge, one of the following two alternatives: a) that the retirement does not involve circumstances that should be brought to the knowledge of the Stock Exchange; or: b) that the retirement does involve circumstances that should be brought to the knowledge of the Stock Exchange, detailing the circumstances. 22

23 16. The name of a person residing in Israel who is authorized to receive court documents and notices for the Company and the person s contact details are as follows: The authorized representative s name: Address: Telephone: Facsimile: We undertake to notify you in writing of any change in the authorised s representative s identity and contact details, within one day of the change. 17. We have received a legal opinion detailing whether the Company must be registered in Israel as a foreign company. According to the legal opinion (delete the inapplicable): a) the Company must be registered in Israel as a foreign company; or: b) the Company need not be registered as a foreign company. In accordance therewith, we undertake that all the Company s activity on the Stock Exchange shall be carried out from abroad, including its contracting with the customers for whom the Company operates on the Stock Exchange. 18. We undertake to report to the Stock Exchange, in writing, on the termination or suspension of our membership of another stock exchange of which we are members, giving the details and circumstances of the termination or suspension, immediately after the membership s termination or suspension as aforesaid. 23

24 19. The Company has the mechanisms, means, computer systems and professional personnel enabling its standard activity on the Stock Exchange, and the performance of its duties to its customers, the Stock Exchange and the Stock Exchange members, as described in detail below: 20. Our plans with regard to our activity on the Stock Exchange, including with regard to the manner of complying with the provisions of the Rules, Regulations and Temporary Regulations, the daily monitoring of our activity on the Stock Exchange and the Stock Exchange s reporting requirements are as described in detail below: The Company is willing to orally present the details of its plans, as aforesaid, to the Stock Exchange, insofar as required. 21. We acknowledge that the only binding version of the Stock Exchange Rules, Regulations and Temporary Regulations is their Hebrew version. In addition, we acknowledge and agree that sole jurisdiction in connection with our activity on the Stock Exchange, in legal proceedings to which the Stock Exchange is a party and in legal proceedings to which an Israeli-resident customer who has received services from the member in Israel is a party, shall be the competent court in Tel Aviv, and the law governing these proceedings shall be the Israeli law. 22. We undertake to furnish the Stock Exchange with all the information required by it in connection with our activity on the Stock Exchange, and to cooperate with the Stock Exchange s supervision of our activity on the Stock Exchange, which may be carried out through correspondence and the furnishing of information required by the Stock Exchange on our activity as aforesaid, or through physical audits at our offices, insofar as required. We undertake to furnish the Israel Securities Authority with all the information required by it in connection with our activity on the Stock Exchange. 24

25 23. We undertake to include a provision in our contracts with our customers who are active on the Stock Exchange enabling us to furnish the Stock Exchange and the Israel Securities Authority with any information regarding their activity on the Stock Exchange. Yours faithfully, The Applicant for Stock Exchange Membership Names and positions of the Company s signatories: 25

26 Appendix B" Major Banks, Members of TASECH & MAOF CH Members Member Name Address City Tel. Fax Web Site Citibank, N.A. (*) 21 Ha'Arbaa St., Tel-Aviv HSBC Bank PLC (*) 74 Rothchild Blvd. Tel-Aviv Union Bank of Israel Ltd. 6-8 Ahuzat Bayit St. Tel-Aviv Israel Discount Bank Ltd. 23 Yehuda Halevy St. Tel-Aviv Bank Hapoalim B.M. 63 Yehuda Halevy St. Tel-Aviv Bank of Jerusalem Ltd. 2 HaNegev St. Motorola Building Airport city, Lod Bank Leumi Le-Israel B.M. 34 Yehuda Halevy St. Tel-Aviv Mizrahi Tefahot Bank Ltd. 7 Jabotinsky St. Ramat-Gan Mercantile Discount Bank td. 125 Menachem Begin Rd., Tel-Aviv First International Bank of Israel Ltd. 42 Rothschild Blvd. Tel-Aviv (*) TASECH Members only 26

27 Appendix C" Chapter Four - A: Transactions of an Exchange Member Who is not a Maof Clearing House Member 1. A member may provide services to a Stock Exchange member who is not a member of the MAOF Clearing House (hereafter: NCHM), and that when the following conditions are complied with: 1.1 Its shareholders equity shall exceed the minimum required shareholders equity set in Chapter Four of the By-laws. 1.2 It has the means and the professional manpower that enable it to provide service to NCHM. 1.3 It has the means necessary in order to calculate in an ongoing manner and in real time margin requirements in respect of the NCHM activity in derivatives traded on the Stock Exchange A member that meets the requirements of section 1 above (hereafter: "member that clears for another") may provide services to an NCHM as its client, and the NCHM and each of its clients shall - in respect of all matters pertaining to these By-laws be considered clients of the member. 2.2 Without derogating from the generality of the aforesaid in section 2.1 above, and in order to dispel any doubt, it is hereby clearly stated that all the provisions in Chapter Seven-B below including the provisions regarding the early termination of MAOF transactions to which the member is a party, the grant of an irrevocable power of attorney by the member, the delegation of authority, liens and off-sets shall apply to the member also in respect of the MAOF transactions that the NCHM (for which the member serves as the clearing member) carries out, whether on its own behalf or on behalf of its clients, as specified in paragraph 4 below, and those transactions, shall for all intents and purposes, be considered MAOF transactions executed on behalf of the member s client. 3. The NCHM shall deposit with and charge to the credit of the member that clears for another, which is not a bank, collateral composed of assets that can be realized immediately in an amount that shall not be less than 20% of the margin required of the clearing member by the MAOF Clearing House in respect of the clients of the NCHM under section in Chapter Eight, together with the margin, that is required from the member that clears for another by the MAOF Clearing House, in respect of the nostro accounts of the NCHM under section in Chapter Eight. 27

28 4. A member that clears for another may agree that a NCHM will debt him for options and futures transactions carried out by the NCHM on the Stock Exchange, subject to the following conditions: The provisions of the By-laws, referring to the restrictions imposed on the scope of open positions and on accepting client collateral shall also apply to the transactions that the NCHM carries out, whether on its own behalf or on behalf of its clients, as aforesaid; In order to dispel any doubt, it is hereby clearly stated that all the transactions carried out by the NCHM., as aforesaid, whether on behalf of itself or on behalf of its clients, shall be considered, for all intents and purposes, transactions to which the member is a party, including but without derogating from the generality of the aforesaid on all matters pertaining to the early termination of MAOF transactions to which the member is a party, the grant of an irrevocable power of attorney by the member, the delegation of authority, liens and off-sets. 4.2 In order to calculate the collateral that the A member that clears for another must provide the MAOF Clearing House, the NCHM and every client of the NCHM shall be considered a client of the member that clears for another, subject to the following conditions: An agreement shall be made between the A member that clears for another and the NCHM, which defines the relations between them and includes everything provided in this section 4 (hereafter: "MAOF Clearing Agreement"); in the MAOF Clearing Agreement the member that clears for another shall set the maximum amount of margin, within which the NCHM may deal in derivatives traded on the Stock Exchange (hereafter: "the maximum amount"); the member that clears for another shall not enable the NCHM to carry out through it activity, for which the required margin exceeds the maximum amount; The open positions of the NCHM. and of each of its clients shall be reported by it directly to the MAOF Clearing House, or through the member that clears for another, on condition that the open positions of the NCHM. be reported separately from the open positions of the member that clears for another; The MAOF Clearing House shall inform the member that clears for another of the amount of margin that is required of it in respect of the NCHM, having taken into account the open positions of the NCHM and of each of the clients of the NCHM; The member that clears for another shall inform the MAOF Clearing House about every transfer of options or futures from the accounts of the NCHM or from the accounts of the clients of the NCHM, or about every transfer to the said accounts; 28

29 4.2.5 Section 5 in Chapter Nine shall also apply to the NCHM; A member that clears for another shall at all times calculate, in real time, the margin required from the NCHM in respect of the activity of the NCHM with derivatives traded on the Stock Exchange; the member that clears for another shall establish a procedure for handling the cases, in which the margin required in respect of MAOF activity by the NCHM approaches the maximum amount set for the NCHM, as well as a procedure for handling the cases, in which the margin required in respect of MAOF activity by the NCHM exceeds the maximum amount set for the NCHM. 5. A member that clears for another shall inform the MAOF Clearing House who the NCHMs are, with which it has MAOF Clearing Agreements that comply with the requirements of section 4 above. 6. A clearing member is liable toward the MAOF Clearing House for the clearing of all transactions of each NCHM with which it has a NCHM Clearing Agreement, even if in consequence thereof it is charged an amount larger than that agreed between them in the MAOF Clearing Agreement. A member that clears for another shall give the MAOF Clearing House an undertaking to clear the transactions of the NCHM, with which it has a MAOF Clearing Agreement, as formulated in the attached Appendix four. 7. If a member that clears for another wishes to stop clearing for a NCHM. that clears through it, then it shall give written notice thereof to the General Manager of the MAOF Clearing House and in his absence to the General Manager of the Stock Exchange. When a member that clears for another has given an aforesaid notice, then it shall be responsible for clearing the transactions carried out by the NCHM until fifteen minutes after the said written notice was delivered, including all liabilities under the said transactions, for which the payment date is later than the time when this undertaking lapses. When the said notice has been delivered to the Director of Trading, the MAOF trading activity of the NCHM shall be stopped. 8. One week before a MAOF Clearing Agreement lapses, the member that clears for another shall give written notice of the date on which the agreement lapses to the General Manager of the MAOF Clearing House, and in his absence to the General Manager of the Stock Exchange. The member that clears for another is responsible for clearing the transactions carried out by the NCHM. up to the time when the MAOF Clearing Agreement lapses or until the said written notice is given, whichever is later, including all liabilities under the said transactions, for which the payment date is later than the time when this undertaking lapses. 29

30 9. Reports of transactions produced in the course of trading on the Stock Exchange, in respect of transactions in options or futures by the NCHM, shall also be given to the member that clears for another, concurrently with their delivery to the NCHM. 10. In cases in which the NCHM reports its and its clients' open positions directly to the MAOF Clearing House, as said in section above, the MAOF Clearing House shall on the day after the trading day deliver to the member that clears for another the list of the open positions of the NCHM and of each of its clients, and that according to the report that the MAOF Clearing House received from the NCHM. 11. A NCHM shall accept services only from one member that clears for another. 12. The member shall credit or debit the NCHM that clear through it concurrently with the credit or debit of its account with the MAOF Clearing House in respect of the exercise of options, and the NCHM shall credit or debit its clients in respect of the exercise of options concurrently with the credit or debit of its account with the member that clears for it. 13. It is hereby clearly stated that the provisions of this Chapter in respect of NCHM do not derogate in any manner from any obligation the member that clears for another has toward the MAOF Clearing House in connection with transactions carried out by the NCHM for which the member serves as clearing member, and these transactions shall for all intents and purposes, be considered transactions to which the member is a party. 30

31 Nothing contained herein should be construed as investment advice, either on behalf of particular securities or overall investment strategies. Further, while all information contained herein is obtained from sources believed to be accurate and reliable, TASE is not responsible for any errors or omissions. TASE makes no representations and disclaims all express, implied, and statutory warranties of any kind, including warranties as to accuracy, timeliness, completeness, merchantability, or fitness for any particular purpose.

32 The Tel-Aviv Stock Exchange Ltd. Membership and Supervision dep. 2 Ahuzat Bayit St., POB 29060, Tel Aviv Israel Tel: Fax: lilachbd@tase.co.il w w w. t a s e. c o. i l