ISA recommends moving ahead with digital trading platform

Anat Gueta

The committee focused on digital platforms for offerings, trading, and clearance of securities using distributed ledger technology.

The Israel Securities Authority (ISA) is recommending promotion of a digital securities trading platform, according to a draft ISA report scheduled for publication early next week. The report, a copy of which "Globes" has obtained, will be revealed to the public at the ISA's annual CapiTech conference, "which will feature the theme of technological innovation in the Israeli capital market." The report was written following work by a committee formed by the ISA to promote and institutionalize digital markets in Israel.

At the head of the committee was ISA Tel Aviv Stock Exchange and trading platforms supervision department deputy director Orly Koren, CPA. She told "Globes," "The committee focused in its work on digital platforms for offerings, trading, and clearance of securities using distributed ledger technology (DLT)." One of the leading DLT technologies is blockchain, the first recognized use of which was in the bitcoin cryptographic currency network.

Together with the draft report, the ISA will publish a call to companies in the sector to present bids for establishing a digital securities trading platform. "We invite the public to raise regulatory issues concerning the promotion of markets using innovative technology, particularly issues that they believe are likely to constitute an obstacle to development of this sector in Israel," the ISA says.

Neutral approach to selecting the type of technology

According to the report, the insights that arose from the committee's work concern five main topics. In identification of the potential of DLT technologies in securities trading, the committee states, "DLT technologies have potential for advancement in the Israeli capital market." The committee adds, "Formulating future steps by the ISA for adoption of these technologies will take into account the risks incurred by using them and how to handle these risks in a way that will not prevent their promotion." Concerning the selection of supervised concerns for the use of technologies of this or other kinds, the committee recommends that the ISA adopt a neutral approach, "provided that the technology meets the required standards, and provided that its use does not contravene regulatory goals (prevention of money laundering, protection of customers, and stability risks)."

Published by Globes, Israel business news - en.globes.co.il - on January 14, 2020

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