Tel Aviv Stock Exchange Plans Major Upgrade to Clearing Systems, Eyes Digital Assets

Tel Aviv Stock Exchange to Upgrade Clearing System with AI and Digital Asset Support, Learning from ASX's Failed Blockchain Project

  • Tel Aviv Stock Exchange plans major clearing system upgrade incorporating AI, blockchain, and digital asset capabilities
  • New system will support multiple digital asset functions including custody, settlement, tokenization, and CBDC integration
  • Project aims to avoid pitfalls that led to ASX’s $170 million failed CHESS blockchain clearing system

The TASE (Tel Aviv Stock Exchange) has unveiled plans to modernize its clearing house infrastructure with next-generation technologies, including generative AI, distributed ledger technology (DLT), and cloud computing, while expanding its digital asset capabilities.

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The Israeli exchange has engaged consulting firm Oliver Wyman to spearhead a comprehensive review of business, technological, and regulatory requirements. The initiative will follow a two-phase approach, first establishing core business needs before diving into technological specifications.

Digital assets feature prominently in TASE’s modernization strategy. The exchange has already demonstrated its commitment to blockchain adoption through several milestone projects, including a blockchain-powered government bond trial and the 2020 launch of a securities lending platform built on Hyperledger Sawtooth.

The planned clearing house upgrade will incorporate an extensive range of digital asset functionalities, including:

  • Custody services
  • Clearing and settlement operations
  • Liquidity solutions
  • Asset tokenization
  • Payment processing
  • Staking capabilities
  • Support for stablecoins and CBDCs
  • Cross-platform interoperability

TASE’s measured approach appears influenced by lessons learned from the Australian Securities Exchange (ASX) CHESS replacement project. The ASX initiative, which was abandoned in 2022 after a $170 million investment, faced criticism for its all-or-nothing blockchain approach. According to post-mortem analysis by Accenture, the project’s downfall stemmed from excessive reliance on DLT and smart contracts, rather than strategic implementation of blockchain technology.

The Israeli exchange is taking a more collaborative approach, actively seeking public and stakeholder input on the modernization initiative. This engagement strategy, combined with TASE’s existing blockchain experience and focus on incremental implementation, suggests a more pragmatic path to clearing house innovation than previous industry attempts.

The project aligns with TASE’s broader five-year strategic vision announced in 2022, which emphasized development in DLT, digital assets, and cryptocurrency services. The exchange has already begun enabling qualified brokers to offer specific cryptocurrency services to their clients, demonstrating steady progress toward its digital asset goals.

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