The Tel Aviv Stock Exchange (TASE) has published a proposal to recognise hedge fund holdings in companies listed on the exchange as part of their free float calculations, aligning with international market practices, and is asking for comments on the plan.

As part of the amendment, the holdings of a hedge fund which has a stake of up to 15% in the share capital of a company and has no right to appoint a director or a representative in the company's board, will be recognised as free float holdings.

Under current TASE guidelines, hedge funds that hold 5% or more of a company's share capital are considered an interested party, and are not considered as free float.

According to the TASE plan, any hedge fund that would like its holdings to be classified as free float, would be required to declare, by 1 December of each year, that it complies with the definition of a hedge fund, as prescribed in the Regulations set out in the Joint Investments in Trust Law, and that it manages funds from a minimum of 20 investors.

TASE believes that the recognition of hedge fund holdings as a free float will further enhance liquidity on the capital market, increase the free float holdings in companies for the purpose of inclusion in TASE indices, and enable the hedge funds to act more efficiently in the capital market.