#Israel #Tel Aviv #Tel Aviv Stock Exchange #Repo Market #Israel Finance

Development of the Repo Market in Israel

The Tel Aviv Stock Exchange (TASE) has embarked on an initiative aimed at enhancing the functioning of the Israeli capital market by focusing on the development of a Repo (Repurchase Transactions) market. This initiative stems from a collaboration among several key financial entities including the Accountant General Department of the Ministry of Finance, the Bank of Israel, and the Israel Securities Authority. The goal is to overcome the limitations of the current market and establish a more sophisticated Repo framework in Israel.

What is a Repo Market?

Repo transactions play a crucial role in the financial landscape of developed markets. Through these transactions, one party provides cash to another in exchange for collateral, typically in the form of securities, which may include government bonds or other low-risk financial instruments. The party providing the cash expects to repurchase these securities at a later date, effectively creating a tool for financing that allows institutions to manage liquidity efficiently.

However, the Repo market in Israel has traditionally been underdeveloped, unable to match the performance and accessibility seen in other regions. Recognizing this gap, the joint task force has initiated a call for proposals to assess the feasibility and outline potential pathways to foster growth in this sector.

The Objective of the Initiative

The task force aims to identify barriers hindering repo transactions in Israel. By soliciting input from market participants both within the country and internationally, they hope to garner insights into preferred mechanisms for establishing repo transactions. Further investigation will assess which types of assets can effectively serve as collateral and how these transactions could contribute to enhancing liquidity for both Shekels and foreign currencies. The initiative particularly emphasizes the importance of operational models that can facilitate smoother transactions and better market connectivity.

Developing a robust Repo market is expected to yield multiple benefits. For local institutional investors, including banks and mutual funds, it would provide alternative investment opportunities and avenues for generating additional returns. For the broader public, the availability of more sophisticated products could bolster overall investment activity within the market. It would also help in liquidity management and fundraising endeavors, enhancing the accessibility of the local capital market to foreign investors, which is crucial for economic growth.

Call for Participation

To facilitate a collaborative effort in shaping the future of the Repo market in Israel, the task force invites participation from various stakeholders. The comprehensive call for proposals encourages individuals and organizations to share their insights on barriers, operational preferences, and strategic recommendations for the market's development. Submissions are due by March 13, 2025, with written responses directed to Mr. Dan Kamieniecki of the Tel Aviv Stock Exchange.

As the TASE pushes forward with this initiative, the momentum is set to steer the Israeli financial landscape towards modernization and improve its integration into the global market. Stakeholders are encouraged to play a part in this transformation, helping establish a sophisticated market infrastructure for the future.

For further details, you may refer to the full call for proposals available here.