Foreign Banks, Investment Funds to be Allowed into Israel
In a move government officials hope will lower costs for Israelis, the Finance Ministry on Sunday approved a law that, if passed by the Knesset, would allow foreign investment funds to operate in Israel. Currently, only funds by approved Israeli financial institutions can make offerings to Israelis.
According to the Israel Securities Authority, which will administer the process of licensing foreign investment funds, the change will “revolutionize” the investment market in Israel, giving more Israelis better access to securities markets, while lowering the cost of commissions pocketed by funds.
The foreign funds will be allowed to make offerings only for investments outside of Israel, the Authority said, a concession to local banks who lobbied against the bill. Currently, Israelis who wish to invest in foreign securities have to either invest via a fund run by an Israeli bank, or buy foreign currency and open up an account, transferring money abroad. The new law will allow Israelis to invest in funds directly, in shekels.
Commenting on the move, MK Yitzchak Cohen (Shas) chairman of the Knesset Insurance Subcommittee, whose approval was needed for the law to continue onto the Securities Authority, said that it was “a historic day for the Israeli economy. For the first time large foreign banks and investment funds will be able to operate in Israel. This will increase competition in the market, which will only benefit Israeli investors, who will now be able to find investment products that require less commission payments.”