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The events on the Tel Aviv Stock Exchange just minutes before trading closed on Tuesday symbolized a new low in the relations between investors and the securities and exchange authorities. If no action is taken, the small investor will be hard pushed to rely on the supervisory bodies.

Yesterday in response to the public furor over Tuesday's episode, the stock exchange management set up an immediate discussion on the matter, while the Securities Authority issued an exceptional statement, saying that a personal indictment will follow shortly.

The episode concerns a deal in Partner shares on the TASE minutes before close of trade Tuesday, where the price was 49 percent higher than Partner's opening price of the day. The share had gained barely 5 percent during hours of trade and up until the deal in question.

Apparently the trade was influenced by other concerns, namely the options trade. The exchange is proud of its derivatives trade, but this seems to exert more and more influence over the basic trade of the TASE - a case of the tail wagging the dog.

Suspicions were first aroused with the rising trade in Partner, together with an increase in the trade in Maof (Tel Aviv 25) put options. Trade volume in Partner Tuesday was quite high for most of the day, and the price had climbed 5 percent up till 4:43 P.M.

At 4:44 P.M. a NIS 6 million buy order came through, buying out all offers on the books. The last order from Excellence, one of the largest and most successful Maof traders, was to buy Partner shares at an irrational price 49 percent higher than its opening level. Partner was to join the Maof list the following morning, so as its share price fell (naturally, after an induced rise of 49 percent the day before), pulling the Maof down with it, a trader would profit handsomely on his Maof put option.

Excellence was as well aware as everyone that changes on the Maof listing come into force on August 1. As it happened, due to other institutional buyers on the market, the ploy apparently failed, and the trader made losses on his put options. But the more serious victim yesterday was the Israeli capital market's image.

Following discussions yesterday by the TASE management, it was decided that just as the opening index is taken randomly between 9:45 and 9:50 A.M., so in the future the closing index would be taken randomly between set times, making it harder to manipulate.

"It is a shameful day, one that we cannot be proud of," said Shaul Bronfeld, the general manager of the TASE, yesterday. He was particularly sorry that the affair centered around Partner "which we worked very hard to bring to Tel Aviv."

The company is listed on the New York exchange and in July 2001 took advantage of the change in Israeli law which makes dual listing on the TASE easier.

Bronfeld said that the derivatives sector, however, had made trading in Tel Aviv more popular, and without it, many investors would not choose to invest in Israeli firms. "Any decision, if there has been a criminal offense, must be made by a judge and not an economist like me," he added.

The Securities Authority meanwhile refused to respond specifically to the Partner share deal, but issued an exceptional statement in which it said that the first suit to be filed involving Maof trading was to follow shortly.

This apparently has no connection to Tuesday's deal, but may only have been a response to the intense pressure put on the authority yesterday.