There was anomalous market behavior indicating that certain traders were aware beforehand of the impending attack on Israel that took place on October 7th.
According to a study conducted by researchers in the United States, individuals involved in insider trading were aware of the Hamas plot to carry out an attack on Israel on October 7. They capitalized on this information by engaging in short-selling of Israeli securities, resulting in significant financial gains in the millions of dollars.
The study, which was published on Monday, detected a sharp uptick in trading activity on Tel Aviv and US stock exchanges before October 7
Israeli authorities are now investigating claims that some investors may have known about the attack in advance and used the knowledge to make hundreds of millions of pounds.
RT reports: Law professors Robert Jackson Jr. from New York University and Joshua Mitts of Columbia University examined trading in exchange-traded funds that invest in Israeli companies, as well as short-selling activity on the Tel Aviv Stock Exchange (TASE) and options activity around Israeli firms traded on US exchanges.
Short-selling is aimed at making a profit on an asset that is expected to drop in price. The seller "borrows" a security and sells it on the open market with the goal of buying it back later at a lower price and pocketing the difference.
Prior to the Israel-Hamas war, there was substantial evidence of a noteworthy practice of selling shares in a short position by researchers.
"Days before the attack, traders appeared to anticipate the events to come," they wrote, citing short interest in the Israel Exchange Traded Fund (ETF) that "suddenly, and significantly, spiked" on October 2 based on data from the Financial Industry Regulatory Authority (FINRA).
The ETF is commonly used as a way for people to make investments in Israel, which on any given day has around 2,000 shares shorted. On October 2, that number shot up to over 227,000 shares, the study revealed.
The professors stated in their 66-page report that there was a significant surge in the short-selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) right before the attack occurred.
Mitts, one of the researchers involved in the study, expressed astonishment at the rarity of the situation. He further shared that the sale of short positions for a single Israeli company resulted in an impressive profit of nearly $900,000.
In another documented example, 4.43 million shares in Leumi, Israel's largest bank, were sold short between September 14 and October 5, yielding profits of 3.2 billion shekels ($862 million). Leumi's share price dropped by almost 9% on October 8 in the immediate aftermath of the attack.
"Taken together, our evidence is consistent with informed traders anticipating and profiting from the Hamas attack," the researchers concluded.
The professors found that the short-selling activity in early October "exceeded the short-selling that occurred during numerous other periods of crisis."
The Israeli Securities Authority stated that it is examining the discoveries made by American researchers. They further mentioned that they are aware of the situation and various parties are currently investigating it.
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