Capital markets News

Tel Aviv exchange partners with BTP for blockchain securities lending

tel aviv stock exchange

In May 2018, the Tel Aviv Stock Exchange (TASE), Israel’s only stock market, unveiled work on its Blockchain Securities Lending (BSL) platform in collaboration with Accenture and The Floor. As it nears production, TASE took the smart contract work in-house and today announced that Blockchain Technology Partners (BTP) has been working on operational aspects of the project to ensure production readiness.

At the end of December 2018, the global securities lending aggregate was €2.2 trillion ($2.4 trillion), according to industry body ISLA. And revenues from securities lending in the first half of 2019 were €4.5 billion ($5 billion).

There is no centralized securities lending platform in Israel. By providing such a platform, TASE hopes to make larger securities lending volumes feasible. Greater efficiency will reduce costs and settlement can happen faster, making shorter-term positions possible.

“When we set out on this journey with Accenture, Intel and The Floor our goal was to harness the power of cutting-edge blockchain technology to transform the Securities Lending market in Israel by creating a distributed service available to all our market participants in order to increase the volume of the market and make it available for more players in the market,” said Uri Shavit, EVP, Chief Information Officer, Tel Aviv Stock Exchange.

He continued: “With today’s announcement, there is now a clear path to achieving this goal and taking our BSL Proof of Concept (PoC) forward into production with the help of our delivery partner BTP.”

The Israeli securities lending platform has already been through internal acceptance testing in which BTP was involved. At the start, TASE selected Intel SGX chips for privacy and Hyperledger Sawtooth as the open-source blockchain protocol. BTP is the developer of Sextant for Sawtooth, which is a “production grade” version of Sawtooth plus a set of tools to manage a Kubernetes-based deployment. BTP is also known for integrating the DAML smart contract language with Sawtooth.

As part of the project, Intel also developed and contributed privacy work for Sawtooth. This was committed to the open-source repository, and BTP is proving support on this.

The solution is expected to launch later this year.

It won’t be the first blockchain securities lending platform. Two months ago, Spanish stock exchange group Bolsas y Mercados Españoles (BME) also went live with collateral pledges. Group subsidiaries IBERCLEAR and BME Clearing were involved.

Around the same time, the Deutsche Börse-HQLAX distributed ledger technology (DLT) solution for collateral swaps went live for the global market. Commerzbank, Credit Suisse, and UBS were involved in the initial transactions. Other big banks such as CIBC, Citi, Goldman Sachs, and ING were in the process of onboarding.

The Hyperledger Global Forum takes place in March in Phoenix, featuring numerous industry luminaries. Register by 18 February for a discount.

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