TASE Launches Protected Block Trade Facility, Expanding Trading Capabilities
The Tel-Aviv Stock Exchange (TASE) has recently introduced a new trading platform designed to facilitate large-scale transactions while maintaining confidentiality. This initiative is part of TASE’s commitment to modernizing the Israel capital market and aligning it with global standards.
About the Block Trade Facility
The Block Trade Facility (BTF) system, launched by TASE, enables the execution of protected pre-arranged transactions on the exchange. This system features several characteristics aimed at providing a secure and efficient trading environment.
Advantages of the Block Trade Facility
The BTF system offers various advantages for investors looking to execute large-scale transactions in a protected manner. By minimizing execution risks and enhancing transparency, this platform provides institutional investors with regulatory advantages over off-exchange transactions.
Without a protected block trade facility, brokers are compelled to increase spreads to account for risk, ultimately increasing acquisition costs for end customers. Furthermore, the design of the BTF aims to reduce credit risks associated with off-exchange transactions and improve overall market transparency.
Global Practices and Comparisons
Many leading global exchanges have implemented mechanisms to facilitate large-scale transactions while safeguarding against price impacts and information leaks. These practices are in line with TASE’s efforts to stay abreast of international standards in the financial industry.
For instance, European exchanges have set minimum order sizes for RFQ or block platforms, with prescribed parameters distinguishing between large-scale and standard transactions. Similarly, block trade platforms are available in various international exchanges, catering to both shares and derivatives trading.
Understanding Block Trades
A block trade refers to a pre-arranged transaction between two parties, involving specific details such as security, quantity, price, and identification codes. These transactions are submitted to the exchange as block orders, providing confidentiality and matching opportunities for participants.
Block orders are tailored for significant market players, with minimum order sizes ensuring the execution of large-scale transactions. While block trades impact security turnover, they do not influence the last price of the security.
Overall, the introduction of the Block Trade Facility by TASE represents a significant step towards enhancing trading capabilities and fostering a secure trading environment for investors.
Source : www.morningstar.com