Regulators Move to Overhaul Bank Trading Fees After Record NIS 3.5 Billion Haul

Israeli regulators have unveiled the final plan to reform retail securities trading fees after the five largest banks collected a record NIS 3.5 billion from investors in 2025. That amount, up 18.4% in one year, helped drive a long-running effort by Bank of Israel, the Israel Securities Authority and the Finance Ministry budget department to curb what they describe as distorted subsidies and opaque pricing.

The reform will roll out in three stages. In the first stage, which does not require legislation, banks may offer customers fixed monthly all-in packages for trading instead of charging separately for each transaction, and they must introduce a direct fee for mortgage advice so only clients who actually receive advice pay for it. Regulators say the banks are likely to subsidize that service fully at first.

The second stage requires rule changes and will replace current distribution fees on active funds, which can reach 0.35%, with a lower 0.2% brokerage fee payable only when a purchase follows actual advice. That fee will also apply to passive funds, meaning cheaper active-fund fees may be offset by higher passive-fund costs. Money-market funds are excluded and will keep the current 0.1% model, with no trading fees, to preserve them as an alternative to deposits. The third stage will turn quarterly portfolio-based management fees into a fixed monthly shekel amount, though mandatory brackets for small accounts were dropped after bank pressure and will be reconsidered later.

The report says the reform ends a system in which only 9% of small accounts, up to NIS 300,000, receive investment advice, while 91% subsidize it through management fees. But 66% of advised customers surveyed said they would stop taking advice if it carried an added direct charge. Banks currently still hold about 85% of investment portfolios, yet new trading accounts opened at nonbank members of the exchange jumped from 7% in 2019 to 47% in 2024.

The changes now apply only to banks, although some elements already exist at investment houses. The interministerial team plans to extend similar rules to them later through a long-delayed “broker-dealer” law, which has not passed first reading and would bring roughly 250,000 nonbank trading accounts under fuller Securities Authority oversight. The fee overhaul is part of a broader regulatory campaign, following this week’s overhaul of checking-account fees and amid work on foreign-exchange fees.