Investment Firms Offer Cheaper Entry but Costly Exit Compared to Banks in Israel
In recent years, investment firms in Israel have become significant competitors to banks for retail investors who trade independently on the stock exchange. Since 2025, around 200,000 new retail trading accounts were opened, with nearly one million retail investors currently active, representing about 12% of trading volume on the Tel Aviv Stock Exchange. Investment firms typically offer lower buying and selling fees, dedicated trading platforms, and easier access to markets in Israel and the US. Regulatory changes by the Bank of Israel have facilitated the transfer of investment portfolios from banks to investment firms by mandating online transfer options and capping transfer fees from banks to non-bank members at 5 shekels, significantly reducing barriers for investors to switch from banks.
However, a regulatory gap exists regarding the cost of transferring portfolios between investment firms themselves. As competition grows, more investors are expected to switch between these firms, but transfer fees can reach thousands of shekels for large portfolios. This is partly due to the rapid growth in public financial assets, which rose from 4.5 trillion shekels at the end of 2020 to 7.25 trillion shekels by March 2026, with publicly held stocks more than doubling in value.
A survey of major investment firms shows that transfer fees can amount to hundreds or even thousands of shekels. For example, Blink charges 0.1% per security transferred plus a minimum of $8 per security, resulting in nearly 500 shekels for a portfolio with 20 securities, about 100 times the cost of transferring from a bank. Other firms like IBI, Meitav, Altshuler Shaham, Excellence, and Psagot charge varying fees, often capped between 70 and 150 shekels for Israeli securities, plus additional fees for foreign securities. Psagot offers a 500-shekel reimbursement for transfer fees paid to competitors, but such incentives are typically temporary marketing promotions.
Interactive Israel stands out as an exception, charging no exit fees but only offers trading in foreign securities. David Shem Tov, CEO of Interactive Israel, emphasized that transferring portfolios should be simple and cost-free to enhance investor flexibility.
Despite the growing influence of investment firms, banks still dominate the investment market. Bank of Israel data shows that at the end of 2024, 96% of household investments in money market funds were held through banks, with only 4% via investment firms. Meitav previously estimated that about 90% of Israeli investors still trade through banks, although a gradual shift to investment firms is underway. The Israel Securities Authority noted that stock exchange members are currently not under its supervision, but it is pushing for broker-dealer legislation to grant it proper regulatory powers, with the legislative process ongoing.
