The hidden cost of trading in banks: This is how you pay more for investing in foreign stocks

A Calcalist investigation reveals that the average cost of converting 10,000 shekels to dollars for purchasing foreign securities is about 71% higher at banks compared to investment houses. The gap stems from a dual pricing model at banks that includes an exchange commission and a high conversion spread, while investment houses charge only a fixed spread. The cumulative cost of entering and exiting an investment at a bank can reach 200 shekels.

A Calcalist investigation exposes the high hidden costs involved in trading foreign stocks through banks, compared to investment houses. While the gap in purchase and sale commissions is known, the significant difference lies in currency conversion costs. The investigation shows that the average cost of converting 10,000 shekels to dollars for purchasing foreign securities is about 94 shekels at banks, compared to about 55 shekels at investment houses – a gap of about 71%. The banking model consists of two layers: an explicit exchange commission and a high conversion spread above the market rate. In contrast, investment houses like Excellence, Meitav, and Psagot charge a spread of 1.5-2.1 agorot per dollar without a separate commission. New players like Interactive Israel offer a conversion cost of only 10 shekels. The cumulative cost of entering and exiting an investment at a bank can reach 200 shekels for a 10,000 shekel transaction. The digital bank OneZero is trying to compete with a model similar to investment houses, with a fixed spread of 2.5 agorot per dollar and no exchange commission.