There are a number of options available to investors regarding which firm to use to buy and sell stocks and bonds on the Tel Aviv Stock Exchange. Which is the best one? This article discusses various Israeli brokerages and banks that provide independent and managed investment services in Israel, and a comparison of their fees, commission levels and services. We'll also discuss how you can open such an account.
There is one central Exchange in Israel where all securities (bonds, stocks, ETFs, mutual funds, etc.) are traded. There are 24 member institutions holding seats on the Tel Aviv Stock Exchange (TASE) that are allowed to facilitate transactions for individual and institutional investors. The TASE members are either investment brokerages, banks or insurance companies. Some of these firms offer services for independent and managed accounts for individuals, and others only service institutional investors. Only a select few brokerages offer investors from abroad investment accounts with full-service in English.
Having served many hundreds of clients over the past ten years, Wise Money Israel has determined that the English speakers are best served by opening their investment account at one of three recommended brokerage firms. Wise Money Israel assists investors in Israel and around the world to open and manage their Israeli investments, whether they be Israeli citizens/residents or non-citizens/non-residents. For help, contact us here or sign up for an investment account here.
Bank or brokerage?
Holding an investment account at a bank is expensive, compared with a brokerage firm. Banks tack on more fees than brokerages, and typically charge more in comparable fees and commissions than brokerages. Banks charge a variety of fees such as minimum transaction fees, account management fees, custodian fees, transaction cancellation fees, limit order change/cancellation fees, wire transfer reception fees, currency conversion fees, interest fees, dividend fees, cash withdrawal fees, etc. Brokerages typically charge only a small fraction of these fees, and when they do, you'll find the fee itself is much less. For example, the commission on a single buy or sell order will cost 0.6%-0.65% of the total transaction at the largest banks in Israel (Bank Hapoalim, Bank Leumi) with a minimum commission charge of 26-27 shekels ($8 USD). In comparison, investment brokers charge less than a quarter of that commission percentage, and in most cases the transaction minimum is between 2-5 shekels. At the same banks, the yearly account management fee is 0.6%-0.8% per year of the customer's account balance! This fee is also 75% lower at brokerages. Lastly, we have found that banks are usually less equipped to answer your investment questions, don't speak English, are often harder to contact, don't handle email, and will not be able to manage your money.
Which brokerage should you choose?
The majority of brokerages work only with institutional investors, but several are set up to also handle retail (individual) investors. These firms maintain online trading systems and reports in English and provide telephone/email customer support. These brokerages provide a good and convenient way to participate in the Israeli capital market through investing on the TASE, both for the small and larger investors. Client securities are held in the client's name centrally at the Tel Aviv Stock Exchange through one of these brokerages.
From our extensive experience facilitating client investment in Israel, we've found the best brokerages are: Interactive Brokers, Meitav Dash Trade and IBI. These brokerages offer low commissions per trade and good customer service. Many Wise Money Israel clients hold their investments at these brokerages and have been satisfied with their service. Each brokerage is set up to handle the needs of Israeli and non-Israeli investor and English speakers, and have English online interfaces for investment. Contact us for details on the rates Wise Money Israel has with each brokerage for the clients we manage.
What's the process?
Opening an individual, joint or organizational Israeli investment account requires filling out an application and for some countries providing identification. Wise Money Israel has helped hundreds of clients open their brokerage account remotely via the Internet and also in person if/when the client is in Israel. Israeli and non-Israelis alike can open accounts.
Some of the above mentioned brokerage firms have a minimum opening account balance of $5,000 USD and other do not. You may wire your funds or transfer funds online with these brokerages, and one brokerage also accepts checks. Several brokerages pay interest on cash deposits when Israel's interest rate is sufficiently high. Funds can be withdrawn at any time from your investment account to your bank with a simple phone call or email as necessary.
Brokerage services offered
All investment brokerages Wise Money Israel works with offer the following features:
- Account application in English
- Online trading platform in English
- Telephone customer service (some also email and chat)
- Monthly/quarterly printed statements in English
- Trading in stocks, bonds, Exchange Traded Funds, mutual funds, options, and currencies
- Inexpensive wire transfer to/from your bank
- Inexpensive currency conversion, much less than banks
- Stock and bond information and online charting
In summary, investment accounts can be opened with a bank, insurance company or brokerage. Because of the fees and convenience, brokerages are preferable. You'll be able to invest easily yourself or utilize Wise Money Israel's investment management services at any of these brokerages. Start investing here!