Five Fintech Companies Chosen for Israel's Pilot Program to Enhance Capital Market

The program is aimed at enabling local high-tech companies to improve the market-readiness and market penetration of their products while providing solutions to the challenges faced by the Israeli economy

Aharon Aharon, CEO of the Israel Innovation Authority. Photo: IIA

The Israel Securities Authority and the Israel Innovation Authority have selected five Fintech companies to participate in their Data Sandbox pilot program, which is designed to promote Israeli Fintech companies as part of a strategy led by the Securities Authority to develop a capital market that is innovative, competitive, attractive and accessible for investors. 

The Securities Authority sees great importance in collaborating with regulated entities by meeting the real-world needs of the industry. Such collaboration offers significant impetus for advanced technologies implementation by the ecosystem, with tremendous benefits for investors.

The five companies were chosen following a call for proposals, and a selection process lasting approximately six months. The companies selected offer solutions in a variety of areas such as liquidity provision, digital tools for verification and authentication, identification of trading anomalies, solutions for portfolio investment managers and more. These solutions help meet the many challenges faced by the Securities Authority and the capital market – for example bolstering Stock Exchange liquidity, improving compliance processes while reducing affiliated costs, making data accessible for regulated entities, and more. 

The Data Sandbox initiative offers a direct interface between regulators, regulated entities and high-growth Fintech companies. Companies participating in the project may gain access to the databases of the Israel Securities Authority and the Tel Aviv Stock Exchange (TASE), with significant added value in developing advanced Fintech platforms. 

The pilot program is a unique collaboration between the Securities Authority, the TASE and the Innovation Authority, and was launched with the support of the Israeli Ministry of Finance.

Anat Guetta, chairperson of Israel Securities Authority, said "The Pilot Program, which will begin its operations soon, is part of the Securities Authority's strategy to develop and enhance the Israeli capital market and encourage entities it regulates to collaborate with Fintech companies and their advanced technological solutions for the benefit of the Israeli financial consumer. The path to achieving this goal lies primarily in sharing the knowhow and data accumulated by the Authority along with additional regulatory entities with Fintech companies which offer technological solutions for the capital market, and to guide the pilot process while providing solutions for regulatory issues."

Israel Innovation Authority CEO Aharon Aharon commented that "The goal of this pilot program with the Israel Securities Authority is to allow local high-tech companies to implement their technology for the benefit of the Tel Aviv Stock Exchange and capital market, thus improving the market-readiness and market penetration of their products while also providing solutions to the challenges faced by the Israeli economy. The high demand for this program and the variety of solutions that were submitted and selected highlights the importance of this program and collaboration between the Israel Innovation Authority and Israel Securities Authority. As a result, we have decided upon an additional call for proposals which is currently open for submissions, scheduled to close later this year."

The five companies just chosen for the program are Zirra, Scanovate, Correlt Capital, Fintica AI and Wizsoft Israel. 

Zirra, which translates alternative, non-financial data and use of AI to assess risk level of investments, will offer a unique customized grading model that supports investment decisions. The pilot will be conducted in collaboration with leading investment house Altshuler Shaham. An additional pilot will be carried out with the Israeli Securities Authority focusing on identifying precise and high-quality alternative data relevant to corporations reporting in Israel. 

Scanovate is to establish a SAAS Identity Provider on a cloud for Israeli investment houses’ clients. The pilot will be conducted together with Altshuler Shaham and will result in a digital identification system capable of replacing physical identification, as is currently required for a variety of financial procedures. This may assist with advancing the Israeli investment sector into the digital age, lower costs of client acquisition and allow a wider variety of customers access to investment firms’ services. 

Correlt Capital, a technology company specializing in the development of trading and liquidity provision systems, will operate a proprietary liquidity provision system with significant technological and competitive advantages compared to existing solutions, thus providing a solution to a number of significant challenges outlined in the project’s call for proposals – for example, bolstering stock exchange liquidity. 

In addition, two companies were selected to conduct a pilot with the Authority while using trading data received directly from the Tel Aviv Stock Exchange. Fintica AI will use Artificial Intelligence (AI), and Wizsoft (Israel), which provides ERP solutions and operates machine learning and data mining systems, will run algorithms for the pilot. The collaboration with the two companies will enhance the Authority's existing capabilities of identifying trading anomalies and irregularities.