There is no evidence some investors profited from knowledge of Hamas’s attack on Israel before it took place on 7 October, the Israel Securities Authority (ISA) has said.
One academic study had suggested investors betting against the Israeli economy made large sums.
It said it found significant short-selling in the run-up to the attacks.
But the report has since been called “inaccurate” and “irresponsible” by the Tel Aviv Stock Exchange (TASE).
The ISA said it was dropping its investigation into the matter.
Short-selling is when investors try to make money on shares, bonds or other financial instruments that they think will fall in price.
They arrange to sell shares they do not yet own at the current price, hoping to buy them later at a cheaper price before the shares change hands, so they can then bank the difference.
“Days before the attack, traders appeared to anticipate the events to come,” researchers Robert Jackson Jr from New York University and Joshua Mitts of Columbia University had stated on Tuesday.
The researchers said they had identified a dramatic increase in investors seeking to sell shares in Israeli companies on the TASE.
But the stock exchange said the claims made in the academic paper since were inaccurate, labelling them “irresponsible”.
TASE said the authors of the report had miscalculated the sums, showing the value of the share prices in agorot, similar to pennies, instead of Israeli shekels.
“Therefore they calculate a profit of NIS 3.2bn (£680m) when in practice the profit was only NIS 32m (£6.8m),” TASE’s head of trade Yaniv Pagot told the publication Globes.
He also said claims of a sudden spike in trading before the attack were “divorced from reality”.
The researchers have corrected the currency mistake in their report, but Mr Mitts on Tuesday said that he stood by the “highly unusual” exchange traded fund (ETF) and short-dated options activity also identified by the researchers.
Correction 7 December: This article updates a previous one that included incorrect currency information provided in the report by Robert Jackson Jr from New York University and Joshua Mitts of Columbia University.