ISA Chief Sefi Zinger Warns of Institutional Concentration and Hints at Regulatory Merger

The Israel Securities Authority (ISA) Chairman, Sefi Zinger, has raised concerns regarding the growing market concentration of institutional investors and hinted at the possibility of merging Israel's two primary financial regulators. Speaking at the Harel Finance Center conference at Tel Aviv University, Zinger warned against the emergence of financial conglomerates controlling both banks and insurance companies.

Institutional Concentration and Risks

According to Zinger, institutional bodies currently manage over NIS 3 trillion, with nearly 60% of these assets concentrated among just five entities. He cautioned that creating additional massive financial groups would intensify conflicts of interest, harm competition, and make it harder for the public to compare prices and switch providers.

Replacing banking concentration with institutional concentration is neither competition nor a solution, Zinger stated.

Regulatory Tensions and Arbitrage Reform

The remarks highlight ongoing friction between the ISA, which oversees the capital market, and the Capital Market, Insurance and Savings Authority, led by Amit Gal, which regulates institutional savings. A central point of contention is the arbitrage reform promoted by the Ministry of Finance with ISA support, which aims to unify investment accounts and tax conditions. The Capital Market Authority opposes the plan, arguing it would harm competition and raise costs for savers.

Structural Overhaul on the Horizon

Amid these regulatory clashes, Zinger noted that the current financial regulatory framework requires a reassessment. While stopping short of an explicit demand for a merger, he left the door open for structural changes, emphasizing that any reform must carefully preserve regulatory independence.