Israel stock exchange turns to blockchain for securities lending

Getting your Trinity Audio player ready...

The Tel Aviv Stock Exchange (TASE) has announced that it will launch a securities lending platform powered by blockchain in late 2020. The platform will allow direct lending among all the major financial instruments.

In its press release, the exchange revealed that it will launch the Central Blockchain Securities Lending Platform on November 2.

The Israeli securities market currently lacks a central lending platform, with securities lending being executed using disjointed inter-bank mechanisms. This hinders its full exploitation to satisfy the potential needs of the economic agents.

TASE believes that the new blockchain platform will transform the securities lending market in the country by enabling direct lending among all major financial instruments. It will give the market participants access to larger securities volumes in shorter timeframes, acting as a “one-stop-shop for all securities lending activities.” Smart contracts will also be integrated, eliminating the need for trusted intermediaries.

The use of blockchain technology will offer traders more confidence in the system, TASE said, in addition to cutting all costs, making the platform more versatile as well as enhancing security.

TASE, the only public stock exchange in Israel, has been testing the platform since March, it revealed. It gave its members access to an initial testing environment, allowing them to adapt their systems as they await the production phase in November.

Orly Grinfeld, the Head of Clearing at the exchange lauded the platform, stating, “The blockchain technology will present a new level of safety for securities lending and will support growth for transactions based on this new platform. TASE is a global financial innovation leader, and strategically pursues the technological advancement of the capital market.”

TASE becomes the latest stock exchange to integrate blockchain technology as the securities industry continues to embrace the technology. Nasdaq was one of the earliest adopters, first using blockchain on its secondary market to ensure the secure issuance and transfer of shares for privately-held companies.

Other exchanges have followed in Nasdaq’s footsteps, with the Toronto Stock Exchange, the Deutsche Börse, the Tokyo Stock Exchange, the Indian Securities Exchange Board and the Australian Stock Exchange all in various stages of research and implementation of the technology.