Tel Aviv Stock Exchange (Tase) Clearing House has opened an electronic link with The Depository Trust Company (DTC), the central securities depository for the US exchanges, in a bid to simplify cross-border settlement between Israel and the United States.
The initiative will allow investors to settle trades in either country via book-entry movement for shares of publicly-traded companies listed on both Tase and the US stock exchanges. This averts the need to move physical certificates halfway across the world between the markets’ respective settlement systems, say the companies.
Israeli investors can direct their custodians to move shares electronically to the Tase Clearing House’s account on DTC’s books. This will make those shares available for the Tase Clearing House’s own settlement process. US investors and others holding shares through DTC, similarly, will be able to move shares electronically to, and receive them from, the Israeli DTC account. The manual movement of shares took upwards of 3-4 weeks to process.
Settlement payments remain part of each country’s settlement system, so the shares themselves can move as a free-of-payment transfer between the Tase Clearing House’s and DTC participants’ accounts.
The Tase Clearing House will also provide its members with ongoing custody and asset servicing through its DTC account, including the processing of corporate actions.
Jack Wiener, managing director and deputy general counsel, DTCC, who worked on the link’s development, says: "We have made significant strides towards accommodating 7x24 trading of these securities."
The link will initially be used for 15 Israeli companies' issues that are listed on Tase and the US Nasdaq and the American Stock Exchange.