The Banking Supervision Department publishes a draft directive for public comment, on improving disclosure to customers about fees and returns in their securities portfolio

 

The process was formulated with the Israel Securities Authority.

 

Supervisor of Banks Yair Avidan said, “The information regarding the securities portfolio is of great value to customers. The current step, to improve the presentation of the existing information and the new information that will be available to customers will improve their ability to make an informed decision regarding the best investment channel for them. I urge customers to use this tool and other comparison tools while examining additional investment alternatives and thus choose the best and most appropriate product for them.”

 

Israel Securities Authority Chair Anat Guetta said, “I thank the Supervisor of Banks who enlisted to lead the issue and thus to promote healthy competition for the benefit of the investing public in Israel. At this time, when the wheels of the open banking revolution have begun to move, the information is the negotiating tool through which customers can receive the best service offers for them. Service providers beginning to compare financial information (API) creates an opportunity to enhance competition and therefore I see the importance in implementing the process in as short a time frame as possible, for the benefit of the investing public.”

 

The Banking Supervision Department, in collaboration with the Israel Securities Authority, established in a draft directive a uniform format for presenting information and data to the customers on their securities deposits at the bank. Within this framework, information will be presented to customers about the returns on the securities deposit, the assets held in it, disclosure regarding the activity in the securities deposit, and the fees that the customer pays for the services.

 

The information on the return on the securities deposit will be presented to customers in their personal space on the banks’ websites in an ongoing and dynamic manner, which will enable them to see the return for the period they want.

 

In addition, a uniform framework was defined for more extensive quarterly information that will be available to customers, including information on the market value of the deposit, the flows in the account, the cumulative rate of return at the quarterly level and in comparison with previous years, and information on fees paid for the activities in the securities account.

 

For a customer who receives investment advice, details will also be presented about the name of the consultant/consulting center in accordance with how the advice is given; the level of risk and the extent of exposure to assets and to foreign currency that there is in the securities deposit. The customer will have access to the periodic information presented in previous quarters of the same calendar year.


In addition, the directive defines the manner of calculating the return on the securities, based on the Time Weighted Return (TWR)[1], in order to improve the customer’s ability to compare alternative products and to examine investment alternatives.



[1] The TWR method is an accepted method for assessing the return. Based on this method, the return is calculated for separate windows of time without contributions or withdrawal, and it is based on those time windows.​

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