Tel Aviv Stock Exchange chairman Amnon Neubach is quietly angling to oust its CEO, Yossi Beinart, as the bourse’s plans to revive trading activity has fallen flat so far.
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Reports have been circulating over the last few days that Neubach and several outside directors on the TASE board have launched a quiet campaign against Beinart, who took the job two years ago with the mission of turning around the ailing stock exchange. But they said the campaign hasn’t yet resulted in any concrete measures.
“The bad atmosphere between the two isn’t discernible at [board] meetings,” said one source.
But participants in an emergency conference in the Knesset Monday to discuss the exchange’s problems said Neubach and Beinart sat far apart from each other and Beinart declined an opportunity to speak publicly, leaving Neubach to make remarks.
Sources said relations between Neubach and Beinart have been strained by personality differences. Neubach, who spent most of his career in government, prefers to work behind the scenes while Beinart, a former CEO of the Chicago-based North American Derivatives Exchange, is seen as hard-driving.
The bad blood between the two comes as the TASE has failed to reverse a long-term decline, and it threatens to stall efforts to reverse it.
When Beinart took over at the start of 2014, the TASE had 508 traded companies; it now has just 462. In the past two months, two major companies – Osem and Ituran – opted to delist in a big blow to the exchange’s image.
In addition, only two initial public offerings in shares were completed last year, a record low. Meanwhile, at an average of 1.5 billion shekels ($390 million), the daily trading volume for stocks and convertibles remains about 14% below its peak of five years ago.
Beinart – an Israeli who came to the TASE after a long career as a securities market manager in the United States – has ambitious plans for turning around the bourse, but they have been proceeding slowly; his job is made harder by the fact that declining share market activity is a global phenomenon.
Beinart’s has advanced plans to let small research and development-oriented companies list their shares on the TASE by easing reporting requirements and has set up a marketing department to coax companies into conducting their IPOs on the TASE.
He’s also lobbied with Israeli companies trading overseas to dual-list in Tel Aviv and has scored some successes with SodaStream and the digital ads company Matomy.
Together with Israel Securities Authority chairman Shmuel Hauser, Beinart was responsible for a plan to lure foreign companies with no Israeli affiliation to list on the TASE and attract investors. However, the plan has backfired, most notably in the case of Mannkind, a small U.S. biotechnology company that listed last year and raised 240 million shekels just before its principal business collapsed, saddling Israeli investors with big losses.
Meanwhile, a plan to demutualize the TASE and turn it into a for-profit company is encountering strong opposition from Israel’s banks, which now comprise most of the bourse’s membership. The plan aims to make the bourse more efficient, but in a letter this week, the Association of Banks in Israel raised strong objections.
It said the plan would force the banks to reduce their holdings in the newly incorporated TASE to no more than 5% and subject them to a confiscatory 100% tax rate on profits from the sale of the shares.
”Imposing a 100% tax rate on capital gains is tantamount to nationalization without compensation,” the association said in the letter. “Doing this would violate the principles of fairness and a free market.”