Bank Supervisor Says Trading Fee Reform Should Let Competition Set Prices

Israel’s Bank of Israel, the Securities Authority and the Budget Department announced a securities trading fee reform aimed at bringing order to charges that have generated billions for banks. The plan changes the fee structure, including a fixed monthly management fee and a separate advisory fee, in an effort to make pricing more transparent, narrow gaps between products and help customers compare offerings more easily.

Bank Supervisor Dani Hahiasuoli told Calcalist that combining advice and operations into one management fee was a poor model because many customers receive no advice. He said separating the fees is more appropriate, and added that the reform also introduces flexibility for different payment paths, especially a choice between per-transaction pricing and package deals. A third goal, he said, is to review the nonbank investment house market and create regulatory alignment so bank and nonbank players can be compared.

Asked why the reform still leaves in place a 0.2% brokerage commission that is rolled into the price rather than charged directly, Hahiasuoli said customers need to understand their full costs when buying funds. He said the fund’s payment to the bank is not transparent, making comparison difficult, and that the team considered cutting it to zero, since direct buy and sell fees are currently exempt. In the end, he said, the commission was reduced and unified across all advised customers.

Hahiasuoli also said trading bundles would be an option, not a requirement. Unlike the checking account reform, where the regulator set a simple capped price of up to 10 shekels, he said other areas should involve less intervention so competition can shape prices. He stressed that the market should remain flexible and that customers will need to decide which type of provider and payment model suits them best. On possible pricing tiers based on portfolio size, he said those issues will be examined later, along with whether the fixed management fee should be price-controlled.