Filip De Mott
Updated Tue, 5 December 2023
Israel continues to deploy soldiers, tanks and armored vehicles near the Gaza border in Sderot, Israel on October 14, 2023.
Mostafa Alkharouf/Anadolu via Getty Images
Reuters reported on Monday that Israel is investigating claims of anomalous trading ahead of the October 7 terrorist attacks.
A paper by US researchers cites a significant increase in short selling activity in the days ahead of the attacks.
Short interest trades exceeded spikes in Israel's previous crises, such as the 2014 Israel-Gaza conflict.
Israel is looking into claims by researchers in the US of increased short selling activity ahead of Hamas's attacks on Israel on October 7, Reuters reported on Monday.
The Israel Securities Authority told the outlet that authorities are aware of the matter, which "is under investigation by all relevant parties."
ISA did not immediately respond to Business Insider's request for comment.
The newly published study states that in the days ahead of the October 7 assault, the MSCI Israel Exchange Traded Fund underwent a significant spike in short selling, while short interest on hundreds of Tel Aviv Stock Exchange securities also "increased dramatically."
Short selling, which occurs when investors bet that an asset's price will drop, exceeded levels seen during previous crises in Israel, the study added. This includes the 2008 recession, the 2014 Israel-Gaza conflict, and the COVID-19 pandemic.
"Our findings suggest that traders informed about the coming attacks profited from these tragic events, and consistent with prior literature we show that trading of this kind occurs in gaps in U.S. and international enforcement of legal prohibitions on informed trading," researchers Robert J Jackson Jr. and Joshua Mitts wrote.
The study referred to Bank Leumi, a TASE-listed company, as one example. The researchers say that 4.43 million of the bank's shares were sold short between September 14 and October 5. The trades yielded over 30 million Israeli shekels, or about $7.8 million based on the exchange rate in early October before the attack.
The paper says similar patterns occurred in April, when reports emerged that Hamas was planning an attack on Israel. Short volume the EIS fund peaked April 3 at similar levels to those seen on October 2.
"Taken together, this evidence strengthens the interpretation that the trading observed in October and April was related to the Hamas attack rather than random noise," the researchers wrote.
Reuters reported on Monday that Israel is investigating claims of anomalous trading ahead of the October 7 terrorist attacks.
A paper by US researchers cites a significant increase in short selling activity in the days ahead of the attacks.
Short interest trades exceeded spikes in Israel's previous crises, such as the 2014 Israel-Gaza conflict.
Israel is looking into claims by researchers in the US of increased short selling activity ahead of Hamas's attacks on Israel on October 7, Reuters reported on Monday.
The Israel Securities Authority told the outlet that authorities are aware of the matter, which "is under investigation by all relevant parties."
ISA did not immediately respond to Business Insider's request for comment.
The newly published study states that in the days ahead of the October 7 assault, the MSCI Israel Exchange Traded Fund underwent a significant spike in short selling, while short interest on hundreds of Tel Aviv Stock Exchange securities also "increased dramatically."
Short selling, which occurs when investors bet that an asset's price will drop, exceeded levels seen during previous crises in Israel, the study added. This includes the 2008 recession, the 2014 Israel-Gaza conflict, and the COVID-19 pandemic.
"Our findings suggest that traders informed about the coming attacks profited from these tragic events, and consistent with prior literature we show that trading of this kind occurs in gaps in U.S. and international enforcement of legal prohibitions on informed trading," researchers Robert J Jackson Jr. and Joshua Mitts wrote.
The study referred to Bank Leumi, a TASE-listed company, as one example. The researchers say that 4.43 million of the bank's shares were sold short between September 14 and October 5. The trades yielded over 30 million Israeli shekels, or about $7.8 million based on the exchange rate in early October before the attack.
The paper says similar patterns occurred in April, when reports emerged that Hamas was planning an attack on Israel. Short volume the EIS fund peaked April 3 at similar levels to those seen on October 2.
"Taken together, this evidence strengthens the interpretation that the trading observed in October and April was related to the Hamas attack rather than random noise," the researchers wrote.
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