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Rating |
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Thomas Murray Limited has assigned an Overall Central Securities Depository risk rating of TASE-CH. As of November 2010 the rating is ‘A+’ stable, which translates as low risk. The rating is a weighted average of six different risk components: asset commitment risk, liquidity risk, counterparty risk, financial risk, operational risk and asset servicing risk. |
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Services |
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The TASE-CH provides the following services to the capital market through its members:
For TASE-CH Vacation Schedule, click here. |
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Clearing and Settlement of Transactions |
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TASE-CH clears all securities transactions executed on TASE and MTS Israel, alongside off-floor (block trading) transactions. It transfers the securities from the seller to the buyer, and transfers the monetary consideration from the buyer to the seller.
In order to reduce risk for both buyer and seller, TASE-CH acts as a central counterparty (CCP), assuming the risk that one of the parties may not fulfill its part of the transaction.
TASE-CH members are required to segregate their clients’ assets from their own through designated clearing member accounts. Conditional equity transfers are settled on the day of transaction, T+0. Transactions in debt instruments, including corporate bonds, government bonds and T-Bills ("MAKAMs"), are settled on a simultaneous Delivery Versus Payment (DVP) basis on T+1. Cash transfers are settled on T+1 through the Bank of Israel’s Real Time Gross Settlement system (RTGS). The systems communicate through SWIFT messaging to enable fully automated movement of cash, and bonds (currently limited to Israel government bonds and T-Bills ("MAKAMs").
During trading days, three settlement "windows" are opened (9:15am, 3:45pm and 5:45pm) with a duration of 15 minutes each. During Fridays two settlement "windows" are opened (9:15am and 12:30pm).
As of September 2010 special procedures have been put in place to address transaction failure for securities settling on T+1, which include: daily penalties, partial settlement, a buy-in procedure which is initiated on T+4 and cash compensation on T+21. The market settlement rate for equities is 100% and for government bonds and T-Bills approximately 99.8%.
For additional information, see the TASE-CH Bylaws, Chapter Nineteen: Providing Clearing Services for Transactions Carried Out on the MTS System . |
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Securities Depository & Custody |
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When a company issues securities to the public which it wishes to list on the TASE, it must first appoint a Nominee Company, a wholly owned subsidiary of one of four local commercial banks, to hold the securities concerned in its vaults. The majority of most issues are held by the nominee companies on behalf of TASE-CH. TASE-CH registers the securities in the name of the Nominee Company to the credit of its members. The securities are deposited by the Nominee Company at a “Coordinating Bank” to the credit of TASE-CH.
There are currently four authorized “Coordinating Banks”:
- Bank Hapoalim Ltd.
- Bank Leumi Le-Israel Ltd.
- Israel Discount Bank Ltd.
- Mizrahi-Tefahot Bank Ltd.
The Bank of Israel serves as the central depository for T-Bills (MAKAM) , while the Ministry of Finance fulfills this function for government bonds.
Securities are then held in the name of participants and their nominees in the books of TASE-CH. The nominee concept is recognized in Israeli law and permits the underlying investor to be both legal and beneficial owner of securities.
Shares not registered in the name of a designated Nominee Company cannot be traded on TASE. Deposited securities cannot be used to cover sales until the issuer has confirmed registration of the shares.
Custody services include the following, among other things:
- Payment of dividends, interest, benefits, etc. to securities holders.
- Management of corporate action transactions between TASE-listed companies and TASE-CH members – exercise of warrants, rights, etc.
For additional information, see:
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Central Counterparty (CCP) |
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TASE-CH acts as settlement guarantor for TACT and as central counterparty for MTS-Israel transactions, including custodian transactions. TASE-CH’s CCP obligations are backed by a pooled capital guarantee fund known as the TASE-CH Risk Fund, revalued semi-annually.
TASE-CH does not act as central counterparty for off-exchange block transactions. For these transactions, TASE-CH’s conditional clearance of securities until cash settlement is confirmed ensures non-simultaneous DVP, thereby reducing counterparty exposure.
For additional information, see Part One, Chapter Three: The Clearing House Risk Fund.
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Repurchase Agreeements (REPOs) |
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All REPO transactions are cleared and settled through TASE-CH. When receives a REPO transaction TASE-CH, its balance and first leg is cleared in the first cycle on the following business day. The second leg is cleared in the first clearance round on the day set in the REPO agreement, provided that it is a business day. If the day scheduled for second leg clearance falls on a non-business day, the second leg is cleared on the first subsequent business day . Notwithstanding the above, the first leg of an overnight REPO will be cleared in the second clearing round on the day on which TASE-CH receives the transaction.
For additional information, see Chapter Nineteen "A": Providing Clearing Services for Repo Transactions Carried Out on the MTS System. |
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Mutual Funds |
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TASE-CH handles orders to issue and redeem the units of open-end mutual funds and provides clearing and custody services for these units.
For additional information, see Chapter Twelve: Mutual Investment Trust Funds. |
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Non-listed Securities |
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TASE-CH provides clearing and custodial services for securities issued to institutional investors in private placements, which are not listed for public trading on the TASE, similar to the clearing services provided to listed companies.
For additional information, see Chapter Thirteen: Clearing Securities Not Listed for Trading on the Exchange (NLT). |
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Clearing Services for Dual-listed Shares |
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Following the enactment of provisions facilitating dual listings in Israel’s Securities Law ("Dual-Listing Law"), TASE-CH makes it easier for both Israeli and international investors to execute orders in Israel and in the USA, and enables dual-listed companies to distribute dividends and other payments to foreign investors. As of January 2011, there are approximately 50 dually listed companies traded both in the USA and in Israel.
TASE-CH is a participant in the U.S. Depository Trust Company (DTC) and maintains a two Free of Payment (FOP) links with the DTC. The link is used to facilitate the settlement and payments of Israeli firms' dual-listed securities.
The transfer of dual-listed securities through the DTC account enables expedient, inexpensive, quick and efficient automated transfers. This service reduces TASE-CH’s risk, lowers the company’s short sale balances at the time of the transfer and minimizes administrative processing for the dual-listed company.
For additional information, see Chapter Fourteen: Clearing Israeli DCS Which are Deposited with the DTC. |
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Contingency Backup Facilities |
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The TASE-CH (as part of TASE) has instituted a full disaster recovery plan (DRP) and business continuity plan (BCP), which enable it to complete the clearing and settlement processes. In addition, TASE operates a live wireless back-up communication network.
The TASE -CH DR site is located 35 km from Tel Aviv. This site is tested bi-annually, with the participation of all TASE-CH members to insure business continuity and the resumption of routine operations within a matter of hours.
TASE conducts real-time, on-line back-up of all relevant data to the DR site. The site also provides office space and all the necessary hardware and equipment, enabling TASE staff members to work from the site.
All TASE members maintain a live connection to the DR site. |
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Miscellaneous Services |
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TASE-CH offers additional services such as subscription and redemption services for mutual funds upon request, as well as warrant and rights exercise, and convertible bond conversion services for issuers.
TASE-CH also provides tax refund services, although this is restricted to crediting a members' account if the reclaimed tax is paid via the TASE-CH. The actual interface with the Israel Tax Authority is through the local custodian who holds the securities on behalf of the ultimate beneficial owner.
TASE-CH operates the BOI Intraday Credit System (ICS), which provides liquidity to the Israeli banking system.
TASE-CH operates the Ministry of Finance’s government bond lending facility to Primary Dealers.
For additional information, see:
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