The Tel Aviv Stock Exchange announced that it was partnering with Israeli fintech hub The Floor, global management consulting company Accenture and semiconductor giant Intel for a first-of-its-kind Blockchain-based new securities lending platform aimed at revolutionizing the securities lending market in Israel.
The TASE said in a press release last week that the project’s purpose is to transform the market in Israel “by enabling direct lending among all the major financial instruments.” The platform will “function as a one-stop-shop for all securities lending activities, permitting access to larger securities volumes within shorter timeframes, even operating in shorter-term positions.”
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The TASE said that the use of Distributed Ledger Technology (DLT), that is “a database that is consensually shared and synchronized across network spread across multiple sites, institutions or geographies,”, as the base for the new lending platform “will harness some of the blockchain’s primary advantages and features, such as direct peer-to-peer transactions, Smart Contract, and enhanced security through immutability.”
These are expected to benefit TASE, its custodians and their clients “by reducing costs, increasing security and enabling the market to exploit its full potential.”
TASE CEO Ittai Ben-Zeev said the initiative would further mark the stock exchange as “a global financial innovation leader,” with “a safe, cutting-edge, state-of-the-art platform” based on blockchain technology. The platform, he said, “will present a new level of safety for securities lending and will support growth for transactions.”
The cooperation between the TASE, Intel, Accenture and The Floor began last year during a global Blockchain Hackathon which “quickly transitioned to a concrete opportunity,” according to the press release.
The platform will be built by Hyperledger Sawtooth, a modular platform that supports distributed ledgers, and and which uses Intel Software Guard Extensions (Intel® SGX) technology to encrypt transaction data. Hyperledger Sawtooth was first launched in January 2018 by the Hyperledger project, a consortium of open source blockchains for distributed ledgers.
Accenture, meanwhile, will provide project management, blockchain, and cybersecurity consulting services, and “will play a key role in the development of the platform’s Smart Contracts, one of Hyperledger Sawtooth’s main business attributes.”
“Blockchain technology is poised to bring sweeping innovation to the global capital markets infrastructure, and this project shows how rapidly this technology is taking hold around the world, said Jacob Benadiba, Accenture’s Country Managing Director for Israel. “This project will help TASE create an innovative end-to-end solution that addresses their business, security and technological needs under an extremely powerful new paradigm,” he added.
Rick Echevarria, VP of the Software and Services Group, and general manager of the Platforms Security Division at Intel Corporation said “Intel believes blockchain can transform business processes, and Intel SGX technology is an important enabling technology for blockchain solutions.”
Echevarria said the new initiative was “exciting as it demonstrates the progress made by TASE, The Floor and Accenture in developing a solution that accelerates blockchain adoption and, more importantly, brings value to the financial services market in Israel.”
Gil Devora, co-founder of The Floor, which is based at the TASE, said the exchange was the first stock exchange in the world to pilot and use the platform, which in the future, “will be offered to global custodians, stock exchanges and other asset management firms looking to deploy a robust and operational system for securities lending or other asset classes.”
The project will be deployed in a production environment after a successful implementation of initial Proof of Concept (PoC).
The Tel Aviv Stock Exchange is Israel’s only public stock exchange and plays a major role in the Israeli economy. It is home to over 450 listed companies, with a total market value of approximately $200 billion, 688 corporate bonds, and 709 exchange-traded notes (ETFs).
Last month, the TASE board of directors agreed to sell an almost 20 percent stake in the stock exchange to Manikay Partners LLC, a New York-based fund, for NIS 551 million ($150 million). The process was said to have been non-transparent and surprised players in the Israeli capital market.
Earlier this year, over 10 foreign stock exchanges showed interest in buying a stake in the TASE.