Israeli capital market sources believe that the Tel Aviv Stock Exchange (TASE) should steal a march on the rest of the world by launching trading in options for bitcoin and other virtual currencies. These sources say that regardless of the price of bitcoin, these options are an opportunity that could provide the TASE with a security that fulfills the needs of many investors interested in exposure to these currencies, and could encourage trading on the TASE.
The comments were made in response to the clear warnings and attacks by outgoing Israel Securities Authority chairperson Prof. Shmuel Hauser against the entry of companies that trade in bitcoin and other virtual currencies into the TASE indices.
"Zero-sum game"
Commenting on these views, IBI Brokerage CEO and Tel Aviv Stock Association Brokers Association (TASE members that are not banks) chairperson Julien Assous told "Globes," "There is definitely room for listing options on bitcoin and other cryptocurrencies on the TASE. It's an opportunity for the local stock exchange to take the lead on a global level," adding, "What is good for the CME and CBOE stock exchanges, which are the world's largest derivatives exchanges, (and which already allow trading in futures on these currencies, R.S.) is also good for our stock exchange."
According to Assous, a TASE director, "Instead of sending the public to unsupervised concerns to buy these currencies, action could have been taken in the familiar channels. This is a once-in-a-decade opportunity to put life back into the TASE and attract investors here from all over the world. Furthermore, since bitcoin belongs to no one, no permission from anyone is needed in order to list options on it."
Assous also addressed arguments that the prices of bitcoin and other virtual currencies were high and very volatile, saying, "It may or may not be a bubble. I have no opinion about the price of the currencies, but that's what's good about derivatives; it's a zero-sum game. If you think it's cheap, you buy, and if you think it's a bubble, you sell."
Hauser commented on this issue several times recently, and said today at the "Calcalist" conference, "We will not allow companies whose value is based on the value of bitcoin to be included in one of the TASE indices. We will also consider not allowing camouflaged bitcoin to enter TASE trading by the back door before a suitable regulatory framework for such financial products is found." Early this month, Hauser said that an internal Securities Authority team was expected to recommend how to classify the digital currencies: securities, security-like assets, or something entirely different, with the form of trading being determined by the classification. Even if it is decided that digital currency is not a security, futures and perhaps also options on it, can be traded, with the digital currency constituting the underlying asset. If the team concludes that digital currency is a security or a security-like asset, the Securities Authority is likely to regulate both trading in it and initial coin offerings (ICOs).
For the TASE, cryptocurrencies are subject to the Securities Authority, and current regulation does not allow such trading. In any case, the TASE has made no decision about how it will handle the matter, even if the Securities Authority announces that it will allow such trading.
Published by Globes [online], Israel Business News - www.globes-online.com - on December 26, 2017
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