After almost two years of a political deadlock without much of a functioning government, Israel finally has a new government. So, what does this mean for Israeli Fintech?
According to the coalition agreements, the new government is committed to reducing regulation, removing bureaucratic barriers, and promoting digitization of government services. Furthermore, it is setting a national goal of raising the number of hi-tech workers to 15% of the entire workforce by the year 2026. Prime Minister Bennet, a former high-tech entrepreneur himself, who also served as Minister of Economics, is familiar with the enormous potential of Israel’s hi-tech and fintech sectors and is expected to lead growth enhancing reforms.
One of the first reforms that is expected to pass is the new Designated Exchange Act, which allows for new technological exchanges to serve the local ecosystem. This reform will unlock new opportunities for growth, open the exchange landscape to competition and innovation, and provide access to liquidity for thousands of startups in the fintech and crypto sector.
Why is this an opportunity for Simetria?
Simetria is setting up Israel’s first digital securities exchange, which will be subject to the Israeli Securities Law and regulatory supervision of the Israeli Securities Authority (ISA). On 16.2.2021, Simetria was granted a ruling by ISA that allows it to operate as a digital securities marketplace, without requiring Simetria to obtain a securities exchange license.
There are no available licenses for alternative exchanges under Israeli Securities Law, unlike the United States where the SEC allows trading platforms to register as a broker-dealer and be approved as an alternative trading system, or in the EU where a multilateral trading facility (MTF) is a self-regulated financial trading venue. Additionally, the only clearing and settlement house in Israel is 100% owned by the incumbent Tel Aviv Stock Exchange (TASE) — but things are about to change.
So what’s next?
The first main task for the new Government is to pass the State Budget Law which incorporates government bills and legislative amendments that are necessary in order for the government to fulfill its economic policy (known as the “Arrangements/Hesderim Law”). This Law, which is expected to pass within the next three months, includes a brand new legislative act called the Designated Exchange Act. This charter is a real game changer that will allow Simetria to operate as a globally licensed exchange that runs on DLT.
To sum it all up: A new Israeli government was formed, new legislation is underway, and Simetria is about to become Israel’s first digital exchange. Stay tuned.