Tel Aviv Stock Exchange Explores Evening Trading and Blockchain Integration

The Tel Aviv Stock Exchange (TASE) is considering extending its trading hours until 11:00 PM, a move aimed at reducing operational gaps and better synchronizing with global markets. This initiative, alongside an exploration of blockchain technology for securities registration and trading, is targeted for implementation by 2027. Two joint teams, involving the TASE and the Israel Securities Authority, will be established to examine these possibilities. One team will focus on enabling the buying and selling of stocks and bonds between 5:30 PM and 11:00 PM, while the second will investigate the use of blockchain for issuing, registering, and trading securities.

This potential expansion follows the TASE's recent shift from a Sunday-Thursday to a Monday-Friday trading week. The change to a Friday closing day aligned the Israeli market with major international exchanges, addressing issues for foreign investors and entities operating across multiple markets. Data from the Securities Authority indicates a significant increase in trading volume and foreign investor participation on Fridays since the change, with average daily turnover nearly doubling and foreign investor share rising from 15.3% to 38.2%. The bid-ask spread also narrowed, suggesting improved liquidity and reduced costs for investors.

The proposed evening trading session would initially focus on dual-listed stocks and exchange-traded funds (ETFs) tracking international indices, which are heavily influenced by U.S. market movements after the TASE closes. This would allow investors to react to significant news or market shifts on the same day. The operational details, including which securities would be included, pricing mechanisms, information dissemination, and settlement processes, will be determined by the dedicated team. Banks and brokerage firms would also need to adapt their systems and staffing.

Simultaneously, the exploration of blockchain technology, or tokenization, aims to create digital representations of securities. This could streamline registration, issuance, and trading, enabling faster transaction settlements through smart contracts that automate processes like dividend payments. While the global tokenized asset market is growing rapidly, significant challenges remain regarding system security, cyber defense, regulatory oversight, error correction, and legal status before widespread adoption in Israel can occur.