Tel-Aviv Stock Exchange to Create Digital Asset Platform10.25.2022
The Tel-Aviv Stock Exchange publishes its new strategic plan for the years 2023-2027, following its approval by the Board of Directors of TASE, at the recommendation of TASE’s management, headed by the CEO, Ittai Ben-Zeev.
“The next five years are a critical window of opportunity for TASE to play an active role in the technological revolution of the global capital markets; the plan anticipates the needs of the market and takes the development and management of innovative services and products to the next level; we will not only partake in the change but aim to spearhead it; we will leverage our home court advantage in Israel to adopt and develop Fintech and position TASE as a hub of services and products. TASE will also build up the local capital market’s activity to match Israel’s economic strength and global activity, utilizing this unique opportunity for growth and expansion of its activity.”
The strategic goals of the plan include:
- Developing and enhancing the value proposition of TASE’s core activity.
- Expanding and developing the direct engagement with the end customers.
- Creating a platform for digital assets using Blockchain (DLT) and venturing into Crypto.
- Development and sale of technological services and solutions to other exchanges and market participants.
Principal action plans for 2023-2027:
Continued development and enhancement of the value proposition of the core activity: TASE intends to focus on continued organic growth, reinforcement of TASE’s international profile and bringing in foreign investors, including through expansion of the variety of international products traded and cleared on TASE. Strengthening the liquidity strategy and the derivatives market, including a relaunch of futures. The distribution channels to existing customers will be upgraded and the local market will be aligned with international standards. Reform in OTC, including the development of dedicated innovative systems for the clearing and reporting of OTC transactions.
Expanding the direct engagement with TASE customers: The digitalization of the global financial markets has reshaped the services that are offered to TASE’s customers, creating an opportunity for direct engagement with the customers and many more benefits. Within this framework, TASE will work to strengthen the fields of digital, distribution of information and analytics, including by creating new digital assets and developing a wide range of innovative solutions and services that are customized for the specific segment of the customer. By providing direct services to institutional investors and liquidity providers, including through the TASE Clearing House (securities’ custodianship, lending services), TASE will enable institutional investors to confront market challenges, upgrade the local capital market, reduce costs, eliminate existing concentrations in the financial sector and encourage competition.
Creating a platform for digital assets using Blockchain (DLT) and venturing into Crypto: TASE will promote the implementation of innovative technologies, including DLT, tokenizing of various classes of digital assets and smart contracts. TASE intends to examine multiple potential action plans, including conversion of existing infrastructure to innovative technologies, deployment of innovative technologies into specialized platforms, offering a basket of services and products for digital assets and more.
Export of technological services and solutions to foreign exchanges: Marketing of technological services and solutions tailored for small and medium exchanges, using TASE’s existing and prospective proprietary knowhow and technology. This will strengthen TASE’s collaborations and its international profile, highlighting Israel’s technology and innovation leadership. These services and collaborations may include the acquisition of holdings in foreign exchanges.
In light of the new strategic goals, which significantly increase the volume and reach of activity beyond the scope of the core activity, and based on a study of the corporate structure of the leading global exchanges, TASE intends to advance a restructuring to support the effective implementation of the strategic plan and, down the road, the development and upgrading of the capital market for the benefit of the public. The new structure will consist of a holding company with several subsidiaries (both existing subsidiaries and subsidiaries that will be established to further the goals of the plan). Furthermore, TASE intends to consider the implementation of a plan for strategic purchases and/or investments in its areas of activity and/or in areas that offer added value to its activity.
As part of the approval of the new strategic plan, the management of TASE has set a revenue CAGR from organic growth of 10%-12% over the next five years.
The plan is based on an in-depth analysis of the trends and developments in TASE’s business environment and in the markets. Most notable among these are the macroeconomic status of the State of Israel, the globalization of the financial markets, the competition among global financial centers, alongside regulation that advances the removal of barriers, global standardization, increase in the institutional money supply, and a significantly greater retail engagement in the capital market, mainly as a result of the growing digitalization, the development of investment tools, the removal of entry barriers and more. Also noteworthy are digital innovation trends that blur the borders between the regulated capital markets and the alternative markets, changes in local regulation and a rising interest environment that affects liquidity and investors’ preferences.
The strategic plan for the years 2017-2022 was successfully completed:
The new strategic plan was formulated in preparation for the conclusion of TASE’s previous strategic plan, orchestrated by the CEO, Ittai Ben-Zeev, upon taking office. The 4 principal achievements of the plan: positioning TASE as a key active player in the Israeli capital market, transition from a non-profit to a profitable public company, proof of competence in the development of services and selling processes as well as organizational streamlining, including improvement of the management flexibility.
These are reflected, among others, in strong financial results with a more than double profit margin – from 9% in 2017 to close to 25% in the first half of 2022, and a growth in revenue from services of 7.5% a year over the years 2017-2022, compared to an increase of only 4% a year in the operating cash outflow during the same period.
* The full and binding details are provided in the company’s report and in the Investors’ Presentation.
Link to the report and presentation: https://maya.tase.co.il/reports/details/1482792
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