TASE Clearing

TASE Clearing
Name	TASE Clearing
Native name	בית התִחָרוּת של הבורסה לניירות ערך בתל אביב
Type	Central Counterparty (CCP)
Founded	2007
Headquarters	Tel Aviv, Israel
Industry	Financial services
Products	Clearing, settlement, collateral management, novation
Parent	Tel Aviv Stock Exchange

TASE Clearing

TASE Clearing is the central counterparty and clearing house affiliated with the Tel Aviv Stock Exchange that provides clearing and settlement services for securities, derivatives, and repo transactions. It functions as a systemic market infrastructure linking market participants such as Bank Hapoalim, Bank Leumi, Israel Discount Bank, Mizrahi-Tefahot Bank, and institutional investors including Pension Funds (Israel), Harel Insurance Investments & Financial Services, and Clal Insurance. Operating within the Israeli financial sector, it interacts with international infrastructures such as Euroclear, Clearstream, DTCC, and bilateral counterparties engaged in cross-border trades.

Overview

TASE Clearing acts as a central counterparty replacing bilateral counterparty credit risk through novation, becoming buyer to every seller and seller to every buyer for cleared instruments. Its scope covers instruments listed on the Tel Aviv Stock Exchange and certain off-exchange derivatives and repurchase agreements executed with members of the clearing system. The entity supports settlement finality, netting of obligations, margining, default management, and interoperability with global custodians including J.P. Morgan, Citibank, HSBC, and BNP Paribas. Participants range from universal banks and brokerage houses such as Meitav Dash to asset managers and foreign banks active in Israeli markets.

History and Development

The clearing function evolved from bilateral settlement practices in the early 1990s to a centralized clearing model as part of post-crisis financial infrastructure reforms observed after events influencing Basel Committee on Banking Supervision guidance and G20 commitments. Key milestones include modernization steps aligned with directives from the Bank of Israel and legislative updates to the Securities Law (Israel). Integration with the Tel Aviv Stock Exchange’s trading systems followed reforms inspired by global CCP practices exemplified by LCH, Eurex Clearing, and CME Clearing. TASE Clearing expanded service scope incrementally to include derivatives, repos, and multilayer collateral frameworks, reflecting trends traced to restructurings seen at New York Stock Exchange and London Stock Exchange Group affiliates.

Regulatory Framework and Governance

TASE Clearing operates under supervision by the Bank of Israel and the Israel Securities Authority, functioning within the statutory framework of the Securities Law (Israel) and prudential standards informed by the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions (IOSCO). Governance arrangements include a board with representation from the Tel Aviv Stock Exchange and participant-elected directors, and oversight committees similar to arrangements at NASDAQ and Deutsche Börse. Risk-based capital adequacy, recovery planning, and default rules are structured to meet requirements comparable with those in European Securities and Markets Authority jurisdictions and guided by principles in Basel III.

Clearing Operations and Services

Core services include trade novation, multilateral netting, settlement matching, and lifecycle events processing for equities, corporate bonds, government debt, exchange-traded derivatives, and OTC cleared instruments. TASE Clearing executes margin calls, variation margin transfers, and intraday settlement operations interfacing with payment systems like the Real-Time Gross Settlement frameworks overseen by the Bank of Israel. It administers auctions and default waterfalls akin to practices at CME Group and coordinates with custodians such as Bank of New York Mellon and State Street for cross-border deliveries. Specialized services encompass securities lending facilitation and repo clearing comparable to platforms provided by SIFMA participants.

Risk Management and Collateral Practices

Risk management employs initial margin models, stress testing, and default fund contributions to mutualize residual losses beyond the defaulter’s position, drawing on methodologies used by LCH and Eurex Clearing. Accepted collateral includes Israeli government bonds, certain corporate bonds, and cash in shekels and foreign currencies held through designated settlement banks, with haircuts calibrated against historical volatility and scenario analyses consistent with IOSCO recommendations. Liquidity risk management plans include access to contingency funding, prefunded resources, and coordination with central banking facilities such as those provided by the Bank of Israel. Recovery and resolution playbooks align with templates comparable to those used by European Central Bank supervised infrastructures.

Technology and Infrastructure

TASE Clearing leverages resilient matching engines, risk engines, and message protocols interoperable with SWIFT standards and FIX connectivity used by global brokers including Goldman Sachs, Morgan Stanley, and Barclays. Its infrastructure emphasizes high availability, business continuity, and cyber resilience with disaster recovery sites reflecting best practices from World Trade Center era improvements in financial IT. The platform supports straight-through processing, real-time margining, and interfaces with the Tel Aviv Stock Exchange trading platform and central securities depository functions akin to those at Euroclear Bank.

Membership and Market Participants

Members comprise banks, brokerage firms, institutional investors, and international custodians authorized to clear through membership categories paralleling global CCPs such as LCH and CME Group. Notable participants include major Israeli banks, broker-dealers like Excellence Nessuah, asset managers, and foreign broker members from Europe, North America, and Asia. Participation rules prescribe capital, operational, and risk-management prerequisites, default fund contributions, and access conditions enabling a broad spectrum of market participants to transact with legal finality and centralized counterparty risk mitigation.

Category:Financial services in Israel