Tel Aviv Stock Exchange's Clearing House Links To DTCC's Depository

In a move aimed at improving securities trading between Israel and the United States, the Tel Aviv Stock Exchange (TASE) Clearing House has opened an electronic link with The Depository Trust Company (DTC) that will simplify cross border settlement for

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In a move aimed at improving securities trading between Israel and the United States, the Tel Aviv Stock Exchange (TASE) Clearing House has opened an electronic link with The Depository Trust Company (DTC) that will simplify cross-border settlement for shares of publicly-traded companies listed on both TASE and the U.S. stock exchanges.

The initiative announced today allows investors in both Israel and the U.S. to settle trades that they make in shares of these dual-listed companies on either market through book-entry movements. The link averts the need to move physical certificates halfway across the world between the markets’ respective settlement systems. The TASE Clearing House handles settlement for TASE trades, whereas DTC acts as central securities depository for the vast majority of shares traded on the U.S. exchanges. DTC is a subsidiary of The Depository Trust & Clearing Corporation (DTCC).

“DTCC recognizes that partnering solutions with central securities depositories and others worldwide is critical to lowering the costs and streamlining the steps involved in cross-border trade processing,” said Jeffrey Smith, managing director, DTCC’s International Division.

Dror Shalit, managing director of the TASE Clearing House, said that the link will be used initially for 15 Israeli companies’ issues that are listed on TASE as well as on the U.S. Nasdaq and the American Stock Exchange. Shalit added that since October 2000, 17 U.S.-traded Israeli companies have dual-listed on the TASE and the Israeli exchange expects additional companies will dual-list in the course of 2002. More than 100 Israeli companies are traded on U.S. markets, placing them third in this category behind Canada and the United Kingdom.

As a result of the new link, Israeli investors can direct their custodians to move shares in an instant electronically, as needed, 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. U.S. 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.

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.

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 Tel Aviv Stock Exchange is committed to increasing our market’s efficiency, and that starts with making our settlement platform more attractive to both domestic and international investors,” said Saul Bronfeld, managing director of the Tel Aviv Stock Exchange. “The establishment of the Tel Aviv Stock Exchange Clearing House account at The Depository Trust Company is a significant strategic step in that direction.”

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