Zelikha: Market Makers May Begin Operating in Israeli Capital Market during the Coming Year
The Knesset Finance Committee approved (22/12/04), for second and third reading, a proposal by the Minister of Finance, Benjamin Netanyahu, to amend the State Loans Law to facilitate a far-reaching reform in the government-bond market.
The goals of the reform are to lower the cost of government issues and, in turn, of corporate issues and household finance; to broaden the base of investors in government bonds to include foreign financial entities (among the world's largest) that will undertake to operate continually in the Israeli bond market; to improve the efficiency and overall level of the government bond market; to make the capital market-and, particularly, the bond market-more competitive and less concentrated; and to improve efficiency, lower costs, and achieve economies in the management of the NIS 520 billion government debt, on which above NIS 35 billion in interest is paid each year.
The reform is also expected to make the domestic bond market more liquid and transparent and to induce it to adopt international standards that guide the operations of global bond markets.
The Accountant General, Dr. Yaron Zelikha, describes the reform as one of the most important that the Finance Ministry has carried out in the financial markets in recent years. It may save the state, firms, and households billions of NIS per year, enhance the efficiency and the overall quality of the capital market, and induce foreign financial entities to be more active in and committed to Israel, thus making the domestic capital market less concentrated.
The Accountant General added that after the Knesset passes the bill into law, equal rules and conditions for the appointment of market makers for the Israeli capital market will be issued during 2005.
