Israeli regulator says no suspicious trading before October 7, but questions remain on US-traded securities

The Israel Securities Authority (ISA) has stated that it did not detect any suspicious trading activity on the Israeli stock exchange prior to the October 7 Hamas attack. This contradicts a research paper released by professors at New York University and Columbia University, which found a significant increase in bets against Israeli securities before the attack. However, the ISA’s investigation only focused on trading activity in Israel and did not review trading on a fund listed in New York, which was the focus of the professors’ research. The ISA’s technology intelligence system and a subsequent examination also did not uncover any suspicious activity. In fact, the ISA found that short balances for shares traded on the Tel Aviv Stock Exchange actually declined during that period. The professors’ research, though not peer-reviewed, suggested that traders had inside knowledge of the upcoming attack and profited from it. The head of trading at the Tel Aviv Stock Exchange criticized the research for its incorrect analysis of profit calculations and not understanding the local market. Experts have called for regulators to investigate further using nonpublic market data.