The Tel Aviv Stock Exchange (TASE) is Israel’s only public stock exchange in Israel. TASE plays a central role in the Israeli economy and provides a market infrastructure that is central to the economy’s growth. As part of its strategic plan, TASE embraced fintech and innovation and is offering more digital and innovative products and services to companies and capital market players.
The Fintech Times speak with Netanel Oded, who is the Head of business development at TASE.
Netanel Oded has been working in TASE since 2015 and leads business development. Oded was part of the team that created the strategic turnaround plan for the exchange in 2017, and led several strategic and innovative initiatives within its implementation. Prior to that, Oded worked 6 years in the National Economic Council in the Israeli Prime minister’s office, leading various initiatives promoting growth and innovation in the state level.
What has been the traditional TASE response to financial technology innovations?
TASE has always prided itself, like many financial institutions on reliability and continuity. It was basically 100% focused on operational excellence, providing high end support to listed companies and investors. In that prism, the trading business did not seem to have a relevant space for innovation, and thus a lot of the fintech activity has been overlooked.
How has this changed over the past few years?
In 2017, TASE launched its strategic plan led by the TASE CEO, Ittai Ben Zeev and his management team which were eager for accelerated growth. The exchange demutualised and went public in August 2019, injecting new opinionated shareholders looking to maximise the potential of the company, which runs not only an exchange but also two clearing houses and a nominee company.
This has led to new organisational thinking, new strategy and new appetite to observe and absorb new ideas. A new understanding emerged in the organisation that to survive in a rapidly changing financial world, where TASE is undersized and severely threatened by global giants and local innovative competitors, innovation is an imperative.
Is there anything that has created a culture of change inside the company?
It is challenging to install a culture of “innovation-friendly” to a traditional organizations. I think some small things helped and made a difference. TASE rented out one floor of its office building to a fintech accelerate (“the floor”), so there is more interaction between its staff and entrepreneurs in the field. TASE has organized several hackathons with relevant challenges, and has cooperated with the Israeli Securities Authority (ISA) on a program to incentivize pilot projects in the Israeli financial market. The management and workers recognised that it is a new era for the exchange and we can see change in the motivation to move forward with the new culture.
Nevertheless, the challenge of merging a new idea or technology in the exchange business is something that will always persist, and is something that needs to be dealt with by both the small innovative fintech company, and the exchange or any other financial corporation.
What Fintech ideas have been implemented in TASE?
We have for years pondered about the opportunity in the securities lending business. It is currently handled in Israel, as in many developed markets, as a bespoke business with high barriers to entry and high prices. We decided to disrupt the market and develop a central securities lending platform, based on blockchain technology. This is first-of-a-kind lending pool, a safe, cutting-edge and state of the art platform. The Blockchain technology will present a new level of safety for securities lending and will support growth for transactions based on this new platform. We will launch it on November 2, 2020.
Another example is on the data side. We recently rolled out a new platform – TASE Data Hub, that revolutionises our data offering. It allows all market participants to automatically and directly connect to our databases and data feeds through a simple API system. The groundbreaking product of the system is Smart Money, which offers exposure to daily and historical data of the composition of the monetary turnover in securities, showing the total aggregate monetary transactions by institutional investors and mutual funds in all securities that are listed on TASE.
What benefits have these brought?
We are following a strategy of making TASE more attractive to global investors, as well as to the Israeli public. These innovations along with other developments, allow us to provide potential clients with a better offering and create larger interest.
The fact we are tapping in to new technologies such as Blockchain, AI and machine learning, provides us with a constant stream of additional new ideas and opportunities. The business side is more acquainted with these, our IT department has teams who know how to develop and integrate these technologies with our core technology, so it an ongoing voyage.
Do you see any other industry challenges on the horizon?
The need to innovate and change business models is all around the industry. We feel Blockchain and cryptocurrencies present a major challenge and opportunity for our industry. The automation of investment management and advisory is another challenge. Making participation in the stock market seamless and attractive for the retail clients, is another opportunity that I feel will continue to keep us challenged for quite some time.
Can these challenges be aided by Fintech?
Yes, for sure. I feel the main challenge for companies like TASE is to adapt and integrate. The progress made by fintech companies Is enormous and have the most potential to provide serious opportunity for growth and disruption.
Innovation in the finance sector is different than in other markets. The regulation level is different, and the incumbents are giants. But these are exciting times, where things that were considered impossible, become possible. Patience is still needed, but the potential for innovation is infinite, and mostly untapped.