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New rules will limit underwriters' ability to divide issue management among themselves. This will be one of the changes in new regulations that Antitrust Commissioner Dror Strum is about to publish on issue management by financial market underwriting companies.

Strum has been investigating the underwriting industry for several months. He was primarily concerned with increased market dominance by a small number of players, evident in bank-owned underwriters' success in becoming involved in almost every financial market fundraising deal at the expense of the private brokers.

As part of his investigation, Strum required underwriters to provide details of their activity.

In the past four years, the rate of involvement of bank-owned underwriters in issue management has substantially increased. At least one bank was involved in 41 percent of all deals in 2000, rising to 49 percent in 2001, 73 percent in 2002 and 79 percent in 2003. The rate of deals in which only banking sector underwriters were active rose from zero percent in 2000, to 29 percent and 26 percent in 2001 and 2002 respectively. In 2003, the rate reached 54 percent.

The banks claim that the low prices for the underwriting service indicate that the market is competitive.