The Stock Exchange recently published its new strategic plan for the years 2023-2027, after the approval of the board of the exchange in accordance with the recommendation of the exchange’s management led by the CEO, Itai Ben Zeev.
The main directions of action 2023-2027 will be bContinue developing and strengthening the value proposition of the core activity: The stock exchange intends to emphasize continued organic growth, strengthening the stock exchange’s international profile and attracting foreign investors, including increasing the supply of international products traded and cleared by it. Strengthening the liquidity strategy and the derivatives market including the relaunch of the futures contracts. The distribution channels for the existing customers will be perfected and the characteristics of the local market will be adjusted to the internationally accepted standards. Reforming the OTC worlds, among other things, by developing innovative and dedicated systems in the field of clearing and reporting transactions outside the stock exchange (OTC – Over the Counter).
Deepening the direct activity and relations with the customers: The digitization processes taking place in the international financial markets are also reshaping the nature of the services provided to the exchange’s customers, and are an opportunity to create an open channel for direct contact with the customers while maximizing the opportunities involved. In this regard, the exchange intends to act to strengthen the digital field, the dissemination of information and analytics, including the creation of new digital assets and the development of a wide range of innovative solutions and services adapted to each segment of the company’s customers. Providing direct services to institutional investors and market players including the provision of direct services to institutional bodies by the stock exchange clearinghouse (custodial for securities, loan services) that will enable institutional investors to face some of the challenges in the market and perfect the local capital market, reduce costs, reduce the existing concentration in the financial world and encourage the competition
Establishing a platform for digital assets based on blockchain (DLT) and entering the crypto worlds: The Tel Aviv Stock Exchange will work to implement innovative technologies, including DLT technologies, tokenization of digital assets of various types and smart contracts. The exchange intends to examine a wide range of potential courses of action, including converting existing infrastructures to innovative technologies, establishing dedicated platforms based on the innovative technologies, offering various services and products in connection with digital assets, and more.
Exporting technological services and solutions to foreign exchanges: Promoting the sale of services and technological solutions intended for small and medium-sized exchanges, based on the existing technological capabilities of the exchange and those that will be developed as part of the implementation of the new program. This activity will strengthen the cooperation and the international profile of the stock exchange, taking into account Israel’s status as a country with advanced and innovative technological capabilities. The provision of these services and collaborations may include the purchase of holdings in foreign exchanges.
structural change
Considering the new strategic goals, which significantly expand the scope and breadth of activity beyond the core activities and after examining the corporate structure of the world’s leading exchanges, the exchange intends to promote a structural change that will support the successful implementation of the strategic plan and the continued development and improvement of the capital market for the benefit of the general public. The new structure will include a holding company under which various subsidiaries will operate (including existing and dedicated subsidiaries that will be established to realize the goals of the program). In addition, the company intends to examine a plan for acquisitions and/or strategic investments in its areas of activity and/or in areas with added values.
As part of the approval of the new strategic plan, the management of the stock exchange sets a quantitative goal of an average annual growth rate (CAGR) in revenues, resulting from organic growth in activity, which will stand at a rate of approximately 10-12% over the next five years.
For the purpose of formulating the plan, the stock exchange analyzed in depth the trends and developments in its business environment and markets. Among these it is possible to mention first and foremost the macroeconomic situation of the State of Israel, the globalization of the financial markets which includes the establishment of global financial centers that compete with each other alongside regulation that promotes the removal of barriers and international standardization, an increase in the supply of institutional money and a significant increase in retail participation in the capital market, mainly in light of the strengthening of digitization, development Investment tools, lowering barriers to entry and more. In addition, trends of digital innovation stand out, characterized by a convergence between the regulated capital markets and alternative markets, local regulatory changes and an environment of rising interest rates which affects liquidity, marketability and investor tastes.
met the goals
In its announcement, the stock exchange reported that the strategic plan for the years 2017-2022 was successfully completed: the new strategic plan was formulated towards the end of the previous strategic plan of the stock exchange that was led by the CEO, Itai Ben Ze’ev upon his assumption of office. 4 major achievements should be noted in it: positioning the stock exchange as a key and active player in the market The Israeli capital, a transition from a non-profit to a profitable public company, proof of execution capability in the development of services and sales processes as well as organizational efficiency including the improvement of administrative flexibility.
These are reflected, among other things, in strong financial results with the rate of operating profit adjusted to revenues more than doubling, from a rate of about 9% in 2017 to a rate of close to 25% in the first half of 2022 and a growth rate in revenue from services that stood in 2021-2017 about 7.5% per year, compared to an increase of only about 4% per year in the rate of operating expenses during this period.
Itai Ben Ze’ev, CEO of the stock exchange: “We see the next five years as a critical window of opportunity for the integration of the Israeli Stock Exchange in the technological revolution that the world’s capital markets are going through; The program is a leap forward in the development and management of innovative services and products based on market trends; We not only intend to be part of the change but to strive and lead it; We will leverage our domestic advantage in Israel for the benefit of the adoption and development of fintech technologies and to become an exchange that develops and sells services and products to exchanges in the world. In addition, the gap between Israel’s economic strength and the local capital market activity and what is happening in the world creates a significant unique opportunity for the continued growth of the stock exchange and the expansion of its areas of activity.”