A system of time-division exchange is proposed in which the time slots are independently assigned to the originating and terminating subscribers and are interchanged, in setting up connection, by means of an appropriate delay or memory device. Such a system, which is economically feasible if the code modulation techniques are employed, increases the efficiency by avoiding time slot mismatch loss and simplifies the time slot assignment procedure. The functions required to perform the time slot interchange and the approach to realize the principle are described. The system of time slot interchange in an experimental delta-modulation timedivision exchange is also described, which has been constructed to demonstrate the feasibility of the principle. The system employs a magnetostrictive delay line with multiple output taps as the delay device, the outputs of which are switched by means of a magnetostrictive memory to perform the time slot interchange.