Fueled by Algo Trading, Weekly Options Volumes in Israel Soared By 180% YoY

Institutional investors in Israel are shifting their trading activity away from investments managers and more into algorithmic trading machines, reaching

Tel Aviv Stock Exchange LogoWeekly-options trading volumes on the TA25, the main index of the Tel Aviv Stock Exchange, have risen sharply since they were launched a year ago. According to reports in the Israeli economic press, what is propelling the weekly-options volumes is a shift in the trading methods of institutional investors toward Algo trading.

Algorithmic trading machines, operated by the large investment houses in Israel, now account for a considerable percentage of the overall trading volumes in the country. On a daily average, algos in July 2014 were responsible for 27.5% of stock trading, 24% of corporate bonds trading and 40% of options trading at the Tel Aviv venue.

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Stock options trading on the Israeli exchange is very limited with only eight companies and the TA25 index available as monthly options. Since the weekly options on the TA25 were introduce in July 2013 the trading volumes soared by 180% reaching NIS3.9 billion daily average this month. Thanks to the success of the weekly options the venue is considering issuing options on two more companies and the TA100 index.

Despite the lack of variety, derivatives trading at the Israeli stock exchange are very popular, compared to more traditional instruments, and by any international comparison. As Israeli traders are very familiar with trading currency options with their local banks, (especially the USD/ILS) and are also very tech savvy, online forex companies found the market to be a natural breeding place.

Logo QIR2 2014In our latest Quarterly Industry Report, Forex Magnates examined the state of the FX industry in Israel and analysed the possible effect of new regulations. The report on Israel also exposed the local FX tech scene that develops many of the technologies used by the FX trading world. To view a free sample of the digital version of the QIR2 2014 click here.

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