Tel Aviv Stock Exchange Ltd. — Investor Presentation 2020

May 26, 2020

Tel-Aviv Stock Exchange (TASE) Investors Presentation

First Quarter 2020

1

IMPORTANT: You must read the following before continuing. The following applies to the presentation with respect to The Tel-Aviv Stock Exchange Limited and its subsidiaries and affiliates (collectively, "TASE"). In accessing the presentation, you agree to be bound by the following terms and conditions.

The presentation does not constitute or form part of, and should not be construed as an offer or the solicitation of an offer to subscribe for or purchase the securities of TASE, and nothing contained therein shall form the basis of or be relied on in connection with any contract or commitment whatsoever, nor does it constitute a recommendation regarding the securities. Any investment decision in respect of the securities should be made solely on the basis of the information to be contained in the public reports of TASE.

The information in the presentation is basic and concise while the public reports of TASE contain more detailed information which may be different from, or additional to, the information contained in this presentation. In the event of any contradiction or discrepancy between the presentation and the public reports, the information in the public reports prevails. Thus, the presentation is not intended to serve as a substitute to reading TASE's public reports.

The Information contains statements and information that are forward-looking. Such forward-looking statements and information are only predictions and cannot assure TASE's future performance. Investors have been cautioned that any such forward-looking statements and information are subject to many risks and uncertainties relating to the operations and business of TASE. As a result of such risks and uncertainties, the actual results of TASE may be materially different from any future result expressed or implied in the forward-looking statement or information contained herein. Any opinions expressed in this presentation are subject to change without notice and TASE is not under obligation to update or keep current any of the forward-looking statement or information contained herein.

No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained therein. The information, including but not limited to forward-looking statements, applies only as of the date of this presentation and is not intended to give any assurances as to future results. TASE expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the information that may result from any change in TASE's expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of this document

Outbreak of the Coronavirus in Israel

Macro Review

Gross Domestic Product (GDP)

Bank of Israel forecast(1)

Government of Israel

• Approval of a NIS 80 billion economic aid package.
• Expanded aid package of NIS 8 billion for the self-employed and small businesses.
• Establishment of a NIS 6 billion State Guarantee Fund for large businesses.
• Employee retention grants totaling NIS 6 billion.
• Leniency in entitlement to unemployment benefits.

Bank of Israel

• Reduction of interest by 15 base points to 0.1%.
• Purchase of government bonds totaling NIS 50 billion.
• Entering into U.S. dollar repo transactions with financial institutions, totaling NIS 50 billion.
• Introducing corporate bonds as security for repo transactions.
• Reduction of the Capital Adequacy requirement for banks by 1%

TASE

• Implementation of secure technological processes and of measures for protection of the employees' health, in order to ensure continuous operation of TASE's systems, including trading and clearing, remotely.
• Exceptions and adjustments to the Rules of Maintenance, Suspension of Trading and Delisting (ad hoc provision).

TASE at a Glance / Q1'20 by the Numbers

Established in 1953, TASE is the only Securities Exchange in Israel and a cornerstone of its growing capital market

Primary source of capital raising for the Israeli government

Only clearing house infrastructure in Israel, including clearing/ settlement of mutual funds (major retail investing channel)

TASE plays a critical role in the market infrastructure of Israel as well as the overall growth of its economy

The results for Q1'20

NIS, in thousands

	Quarter Ended
IFRS (GAAP)	March 31, 2020	March 31, 2019	Difference -%
Revenue from services	81,207	64,627	26%
Expenses	63,620	61,736	3%
Profit before financing income, net	17,587	2,891	508%
Financing income (expenses)	(4,407)	4,020	(210%)
Taxes on income	2,950	1,494	97%
Net profit	10,230	5,417	89%
Diluted EPS (in NIS)	0.100	0.054	85%
Non GAAP
Adjusted EBITDA	28,890	14,191	104%
%EBTDA Adjusted margin	36%	22%
Adjusted net profit	10,644	5,417	96%
Adjusted net profit margin	13%	8%

Revenue 1Q'20

NIS, in thousands

	Quarter Ended					49% transactional 51% non-transactional
	March 31, 2020	% of the Company's total revenues	March 31, 2019	% of the Company's total revenues	Difference - %	1%
Trading and clearing commissions	39,680	49%	26,553	41%	49%	14% The increase is due mainly to higher trading turnovers that followed the coronavirus outbreak, which were partly offset by the reduction in the effective commission. Half of the increase is due to higher trading 1Q'20 volumes in shares.
Listing fees and levies	14,977	18%	13,483	21%	11%	Revenue The increase is due mainly to the increase in revenue recognition in respect of listing fees received in previous years (approx. 5%). An 18% 81.2 additional increase resulted from the charging of new annual fees (approx. 4%) and in revenue from existing fees (approx. 2%).
Clearing House services	14,368	18%	12,351	19%	16%	NIS Millions Most of the increase is due to an increase in Clearing House services to members following the coronavirus outbreak (approx. 12%), and due to revenue from new Clearing House services (approx. 2%).
Distribution of data and connectivity services	11,615	14%	11,639	18%	)0%(	18% Revenue from this activity has reduced following efficiency measures taken by the data distributors, which was partly offset by an increase in revenue from private customers (approx. 4%). In opposition, revenue has been on the rise following the launch of the colocation and BSO activities in 2019 (approx. 4%).
Other revenue	567	1%	601	1%	)6%(	Other revenue includes the renting of the Visitor Center, which has Trading and clearing commissions been discontinued following the coronavirus outbreak in March 2020. Clearing House services
Total revenue	81,207	100%	64,627	100%	26%	Securities listing fees, and annual levies Distribution of data and connectivity services

Other

Adjusted Expenses(*) 1Q'20

NIS, in thousands

	Quarter Ended
	March 31, 2020	March 31, 2019	Difference -%
Compensation	36,391	33,536	8.5%
Computer and Communications	6,288	5,736	9.6%
Property Taxes and Building Maintenance	3,134	3,023	3.7%
Marketing	1,430	3,736	)61.7%(
Fee to the Israel Securities Authority	2,699	2,658	1.5%
General and Administrative	2,375	1,747	35.9%
Depreciation & amortization	10,871	10,606	2.5%
Other	18	694	)97.4%(
Total Expenses	63,206	61,736	2.4%

Compensation

Computer and communication

• Property taxes and building maintenance
• General and administrative
• Marketing
• Fee to the Israeli Securities Authority
• Depreciation and amortization
• Other

Balance Sheet, Capital and Liquidity Position

as of March 31st 2020 | NIS Thousands

Assets: Current assets Cash and cash equivalents 141,491 Financial assets at fair value through profit or loss 197,301 Trade receivables 12,287 Other receivables 15,245 Current tax assets 0 Total )1( 366,324 Assets derived from clearing operations in respect of open derivative positions 576,842 943,166 Non-current assets Cash restricted as to use 541 Other long-term receivables 3,345 Property and equipment, net 339,482 Intangible assets, net 112,659 Deferred tax assets 12,681 Total non-current assets 468,708 Total assets 1,411,874 Liabilities and Equity: Current liabilities Trade payables 9,252 Short-term liabilities for employee benefits 37,251 Other payables 4,908 Dividend declared 8,770 Current maturities of lease liabilities 8,897 Current tax liabilities 4,015 Deferred income in respect of listing fees and levies 113,589 Total )1( 176,795 Liabilities derived from clearing operations in respect of open derivative positions 576,842 Total current liabilities 690,431 Non-current liabilities: Non-current liabilities for employee benefits 27,740 Lease liabilities 11,494 Deferred income in respect of listing fees and levies 73,197 Other liabilities 541 Total non-current liabilities 112,972 Total equity 608,471 Total liabilities and equity 1,411,874 Equity Ratio (1) 43%

Capital requirements in respect of the risk components:
Credit risk	36,499
Market risk	5,422
Legal and operational risk (2)	38,932
Business continuity and reorganization (3)	109,930
Contribution against default waterfall	26,150
Total capital requirements in respect of the risk components	216,933
Capital base components:
Total equity	608,471
Less:
Intangible assets	(102,417)
Deferred tax assets	-
Total qualifying capital base	506,054
Capital surplus (qualifying capital base, less requirements)	289,121
Liquidity requirements in respect to the risk components
Business continuity and reorganization	109,930
Contribution against default waterfall	26,150
Total requirements for liquid assets	136,080
Cash and cash equivalents	141,491
Securities portfolio at fair value	197,301
Less – amortization coefficients on the assets	(9,974)
Credit line	30,000
Less – current liabilities	(94,196)
Net liquid assets	264,622
Liquidity surplus (net liquid assets, less requirements)	128,542

129 NIS in Millions Excess Liquidity

(1) Excluded balance derived from clearing operations in respect of open derivative positions (2) A capital allocation equivalent to 15% of the average gross income in the last twelve quarters. (3) A capital allocation equivalent to six months' operating expenses (on an annual basis).

Cash Flow NIS in Millions

	Item	1Q'20	1Q' 19
	Adjusted EBITDA (1)	28.9	14.2
Operating Activities	Changes in working capital	16.7	6.2
	Financing and tax	1.0	4.3
	Total	46.6	24.7
	Investments in property and equipment and in intangible assets	(8.1)	(10.3)
Investing Activities	Acquisition of financial assets at fair value	1.5	0.1
	Total	(6.6)	(10.2)
Financing	Lease payments	(2.5)	(2.3)
Activities	Total	(2.5)	(2.3)
	Total increase in cash and cash equivalents	37.5	12.2
	Free Cash Flow	36	12.1

Revenue Trends

NIS in Millions

(1) The revenue from the distribution of data includes revenue in respect of connectivity, which was previously presented net. (2) Revenue in respect of connectivity was presented in the previous quarters of 2019 in other revenue.

Adjusted Operating Expenses(1) Trends

NIS in Millions

Profitability Trends

NIS in Millions

12 (1) Excludes the reversal of the impairment provision in 2018 and expenses in respect to share-payments in 2017, 2019 and 2020.

2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1

2017 2018 2019 LTM

Issuance Volume

(1) Excludes Private Placements

(2) Corporate Bond Issuances in 2018 includes NIS 6.6bn raised by foreign companies attracted to our market

APPENDIX

14

Q1'20 Revenue Composition

• Trading and clearing commissions
• Clearing House services
• Securities listing fees, and annual levies
• Distribution of data and connectivity services
• Other

Trading and Clearing Commissions

Securities Listing Fees and Annual Levies

Clearing House Services

• Custodian services, clearing of corporate actions, and transfer activities
• Commissions and custodian fees charged monthly based on asset values

Distribution of Data and Connectivity Services(1)

• Real-time data offering to data distributors and financial institutions
• Monthly subscription fees on terminals, indices and data. Additional revenues based on extent of usage and access

Other

Indices and historical data

Rent and conference center revenues and other revenues-NIS 0.6M

Revenue Drill Down | Transactional - Shares

Revenue Drill Down | Transactional - Bonds

Revenue Drill Down | Transactional - Mutual Funds

Revenue Drill Down | Transactional – Derivatives

Daily Contracts (thousands)

Revenue Drill Down | Non-transactional

NIS in Millions Unless Otherwise Noted

0.00105% 0.00105% 0.00105% 0.00105% 0.00105% 0.00105% 0.00105% 0.00105% 0.00105% 0.00105% 0.00106% 0.00109%

Revenue (NIS mm)

Yield

Revenue Drill Down | Non-transactional

NIS in Millions Unless Otherwise Noted

(*) The revenue from the distribution of data includes revenue in respect of connectivity, which was previously presented net.

Q1'20 Adjusted Expense Composition

• Fee to the Israeli Securities Authority
• Depreciation and amortization

Compensation

The 2017 Collective Agreement sets the maximum annual increase in employee base compensation to the greater of 3.5% or CPI plus 1.5%(1)

General and Administrative

professional services, overhead, supplies, utilities, and insurance

Q1'20: NIS 36.4M

Costs associated with

Q1'20: NIS 2.4M

Computer and Communications

Expenses associated with maintenance, support, and software licenses

Marketing

General marketing expenses including marketing to increase

listings and capital raises

Q1'20: NIS 6.3M

Property Taxes and Building Maintenance

• Expenses associated with owning the TASE headquarters
• Q1'20: NIS 3.1M

Fee to the Israel Securities Authority

• Annual fee to the Company's primary regulator
• Q1'20: NIS 2.7M

Depreciation & Other

Q1'20: NIS 10.9M

Q1'20: NIS 1.4M

Note: Expenses exclude expenses to share-based payments. (1) The Chairman of the Board, CEO and Vice Presidents have individual employment contracts, not subject to the 2017 Collective Agreement.

Adjusted Net Profit and Adjusted EBITDA Reconciliation

NIS in Thousands

		Quarter Ended		Year Ended December 31,
		March 31, 2019	March 31, 2020	2019	2018
	Profit (loss) for the year	10,230	5,417	17,558	86,422
	(-) Reversal of impairment provision	-	-	-	)85,108(
Adjusted Net Profit Reconciliation	(+) Expenses in respect to share-based payments	414	-	3,858	-
	(+) Impact of taxes on reversal of impairment provision	-	-	-	19,575
	Adjusted Net Profit	10,644	5,417	21,416	20,889

			Quarter Ended	Year Ended December 31,
		March 31, 2019	March 31, 2020	2019	2018
Adjusted EBITDA Reconciliation	Profit (loss) before financing income, net	17,587	2,891	14,160	113,622
	(-) Reversal of impairment provision	-	-	-	)85,108(
	(+) Expenses in respect to share-based payments	414	-	3,858	-
	(+) Depreciation and amortization expenses	10,871	10,606	43,571	32,672
	(+) Loss (gain) from disposal of property and equipment and intangible assets	18	694	1,358	280
	Adjusted EBITDA	28,890	14,191	62,947	61,466

Transactional Metrics

	Quarter Ended					Year Ended
	31.03.20	31.12.19	30.09.19	30.06.19	31.03.19	31.12.19	31.12.18	31.12.17
Number of trading days	63	59	62	57	60	244	245	245
SHARES
Shares (ex. ETN / ETFs)	649	820	780	767	745	820	703	801
ETN / ETFs on share indices	46.1	64.3	64	64	64	64.3	60	75
Market value (in NIS billions)	695	884	844	832	809	884	763	876
Shares (ex. ETN / ETFs)	1,663	1,200	1,144	1,056	932	1,081	1,124	1,103
ETN / ETFs on share indices	527	231	223	206	217	219	470	301
Average daily turnover (in NIS millions)	2,190	1,431	1,367	1,262	1,149	1,300	1,594	1,404
Average commissions	0.01%	0.01%	0.01%	0.01%	0.01%	0.01%	0.01%	0.01%
Revenue (in NIS thousands)	13,849	8,389	8,698	7,770	7,577	32,434	33,976	34,584
BONDS
Government bonds -Unlinked	313	316	275	246	290	316	248	252
Government bonds -Linked	210	216	262	253	208	216	236	240
Corporate bonds	373	411	410	380	373	411	380	372
Bonds (ex. ETN / ETFs)	896	943	946	908	892	943	864	864
ETN / ETFs on bond indices	26	29	29	22	21	29	27	39
Market value (in NIS billions)	922	972	975	930	913	972	891	903
Government bonds - Unlinked ADV (in NIS millions)	2,492	1,541	1,968	1,593	1,773	1,722	1,741	1,602
Government bonds - Linked ADV (in NIS millions)	1,307	824	940	952	872	897	907	1,010
Corporate bonds ADV excluding ETNs (in NIS millions)	1,043	898	708	786	793	798	899	893
ETN / ETFs on bond indices	182	103	105	78	106	95	160	134
Average daily turnover (in NIS millions)	5,023	3,366	3,721	3,409	3,543	3,512	3,706	3,639
Government bonds Unlinked - Average commissions	0.0019%	0.0019%	0.0019%	0.0019%	0.0020%	0.0019%	0.0019%	0.0019%
Government bonds Linked - Average commissions	0.0028%	0.0029%	0.0029%	0.0029%	0.0029%	0.0029%	0.0029%	0.0029%
Corporate bonds - Average commissions	0.0070%	0.0068%	0.0070%	0.0071%	0.0069%	0.0069%	0.0069%	0.0069%
Government bonds (in NIS thousands)	2,932	1,752	2,300	1,798	2,201	8,052	8,106	7,588
Government bonds (in NIS thousands)	2,314	1,414	1,674	1,676	1,603	6,367	6,431	7,096
Corporate bonds (in NIS thousands)	5,386	4,000	3,547	3,671	3,896	15,116	17,998	17,239
Other (MTS) (in NIS thousands)	42	28	59	38	61	187	281	288
Revenue (in NIS thousands)	10,675	7,195	7,581	7,183	7,761	29,722	32,816	24,623

Transactional Metrics | Continued

	Quarter Ended					Year Ended
	31.03.20	31.12.19	30.09.19	30.06.19	31.03.19	31.12.19	31.12.18	31.12.17
TREASURY BILLS
Market value (in NIS billions)	112	120	120	117	114	120	108	92
Treasury bills ADV (in NIS millions)	911	421	452	341	436	413	431	214
Average commissions	0.0019%	0.0025%	0.0021%	0.0030%	0.0027%	0.0026%	0.0034%	0.0019%
Revenue (in NIS thousands)	1,080	617	595	623	746	2,581	3,622	1,019
MUTUAL FUNDS
Market value (in NIS billions)	200	259	248	238	230	259	220	243
Average daily value of creation / redemptions (in NIS millions)	1686	907	868	844	913	883	960	946
Average commissions	0.0076%	0.0109%	0.0114%	0.0113%	0.0104%	0.0110%	0.0102%	0.0100%
Revenue (in NIS thousands)	8,106	5,849	6,127	5,732	6,007	23,716	23,900	23,325
DERIVATIVES
Options on indices (1)	121	85	107	101	93	97	134	131
Derivatives on FX	59	54	47	40	40	45	59	55
Derivatives on single shares	3	3	4	3	2	3	3	3
Total derivative contracts (in '000 units)	182	142	159	145	135	145	196	189
Average commissions	0.580	0.580	0.580	0.580	0.580	0.580	0.580	0.580
Revenue (in NIS thousands)	5,971	4,288	5,192	4,607	4,461	18,547	25,042	24,429
Total revenue from Trading and clearing commissions	39,680	26,338	28,193	25,915	26,552	107,000	119,355	107,980

Non-Transactional Metrics

	Quarter Ended						Year Ended
	31.03.20	31.12.19	30.09.19	30.06.19	31.03.19	31.12.19	31.12.18	31.12.17
CLEARING HOUSE SERVICES
Market value of assets (in NIS billions)	2,265	2,639	2,564	2,478	2,419	2,639	2,310	2,455
Avg. commissions on custodian fees	0.00109%	0.00106%	0.00105%	0.00105%	0.00105%	0.00105%	0.00105%	0.00105%
Revenue from: (in NIS thousands)
Custodian fees	6,671	6,970	6,691	6,503	6,370	26,534	26,435	25,480
Clearing House services for members / company events	6,514	6,039	5,090	5,362	4,669	21,160	18,907	15,157
Other	1,183	1,175	1,136	1,013	1,312	4,636	4,263	3,905
Total revenue from Clearing House services	14,367	14,184	12,918	12,878	12,351	52,331	49,605	44,542

Non-Transactional Metrics | Continued

		Quarter Ended				Year Ended
	31.03.20	31.12.19	30.09.19	30.06.19	31.03.19	31.12.19	31.12.18	31.12.17
LISTING FEES AND LEVIES
Weighted avg. number of companies / funds
Companies	531	531	536	539	540	541	563	535
Mutual funds and ETNs / ETFs	2,150	2,119	2,099	2,088	2,087	2,132	1,511	1,397
Avg. revenue from levies (in NIS thousands)
Companies	5	5	5	5	5	19	13	13
Mutual funds	2	2	2	2	2	7	7	7
Revenue from annual levies from: (in NIS thousands)
Companies	2,766	2,520	2,540	2,543	2,596	10,198	7,236	6,949
Mutual funds & ETFs	4,354	3,826	3,843	3,821	3,850	15,339	11,033	9,882
Nominee Company	751	823	588	549	568	2,530	1,883	340
Issuance volume and swap transactions (in NIS millions)
Shares and bonds	19,835	34,151	18,862	21,852	16,550	91,415	74,661	86,360
Government bonds	18,552	18,192	24,843	21,034	22,047	86,115	59,709	58,193
Short term T-bills	27,962	35,948	35,922	35,887	23,927	131,684	137,712	100,883
Number of issuances
Tel Aviv public offerings	23	17	13	18	12	60	64	92
New offerings	2	1	2	3	1	7	11	17
New dual-listed companies	1	-	2	1	-	3	3	3
Issuance volume and funding
IPOs (in NIS millions)	437	500	514	2,140	53	3,206	1,844	3,014
Preferred shares (in NIS millions)	-	-	-	-	-	-	-	798
New offerings (in NIS millions)	-	120	110	1,498	-	1,728	7,196	7,540
Corporate bonds Number of issuances (total)	33	43	46	41	30	160	142	177
Corporate bonds Number of issuances (new)	-	1	1	2	-	4	13	14
Average revenue from examination and listing fees
Shares and bonds	0.0201%	0.0214%	0.0143%	0.0187%	0.0285%	0.0229%	0.0227%	0.0156%
Government bonds	0.0036%	0.0036%	0.0036%	0.0040%	0.0035%	0.0035%	0.0040%	0.0040%
Revenue from examination and listing fees (in NIS thousands)
Examination fees	1,479	1,331	1,155	1,456	1,475	5,416	7,985	5,834
Listing of shares & bonds	3,986	7,310	3,864	6,238	3,545	20,958	16,922	13,458
Listing of government bonds	675	660	883	730	772	3,045	2,388	2,328
Listing of T-bills	196	252	251	251	167	922	964	706
Annual levies and handling fees from member	-	868	152	106	82	1,208	-	-
Other	98	344	171	119	112	746	774	240
Effect of IFRS on Listing Fees	673	(3,726)	62	(2,336)	316	(5,684)	(2,660)	-
Total revenue from Listing fees and levies	14,978	14,208	13,508	10,480	13,477	54,677	46,525	39,737

Non-Transactional Metrics | Continued

			Quarter Ended				Year Ended
	31.03.20	31.12.19	30.09.19	30.06.19	31.03.19	31.12.19	31.12.18	31.12.17
DISTRIBUTION OF DATA AND CONNECTIVITY SERVICES:
Average number of data terminals
Domestic business clients	7,607	7,335	6,804	6,679	8,276	7,274	8,073	8,445
Domestic private clients	7,766	4,426	6,868	6,533	4,670	6,489	-	-
Overseas	4,293	4,987	4,824	4,721	5,013	4,886	4,745	5,200
Quote generator	272	254	234	242	171	245	-	-
Revenue from data terminals and data (in NIS thousands)
Domestic business clients	4,131	3,779	3,674	3,607	4,469	15,528	17,438	18,140
Domestic private clients	815	393	729	1,114	490	2,726	-	-
Overseas	1,346	1,574	1,528	1,525	1,642	6,270	6,148	6,709
Quote generator	400	353	344	322	411	1,430	-	-
Usage based	1,682	1,668	1,460	876	1,789	5,793	8,342	8,131
Indices and data	1,014	857	550	544	1,068	3,019	3,026	3,660
connectivity services	2,226	2,065	2,136	1,684	1,769	7,654	-	-
Total revenue from Distribution of data and connectivity services	11,615	10,688	10,422	9,672	11,638	42,419	34,954	36,640

CONTACTS

Yehuda van der Walde EVP CFO

Email: cfo@tase.co.il

Tel: +972-76-8160442

Orna Goren Head of Communication & PR unit

29

Email: tase.ir@tase.co.il

Tel: +972-76-8160405