The ‘Final’ Frontier of Algorithmic Trading

Do you believe in perfect markets? A secret algorithm has granted  a  small Israeli company in Herzliya more than $100 million in profit, yet only few have heard of the company. Founded in 2001 by Noam Stern-Perry and Nir Clarkstein, FINAL develops Financial Algorithms that aparently are able to ‘beat the market’.  The only press mentioning for this company is from this week, and in Hebrew only.

Calcalist got the scoop and found one of the best kept secrets in Israel. The company’s founders are mathematicians in training. The algorithm identifies linkage among dozens of parameters at any given time, and is able to compute the variability into the price of a futures contract in fractions of a second, enabling it to close the day with astronomic profits. It’s one of many algo trading companies, but it is also mentioned as one who is close to the perfect solution.

According to estimates by experts, FINAL started with only $6 million of funding and has been profitable from day one. In 2005, FINAL marked profits of $60 million, and in 2007 it crossed the $100 million line. Calcaslist tried to contact the shareholders and former employees of FINAL but they would not speak about it publicly.The CEO is the only one who commented, and said that he does not want the company to get exposure to reduce competition…

In terms of trade volume, FINAL works best in large liquid markets, so the Tel Aviv stock exchange hasn’t been part of the company’s activity. However, it is estimated that FINAL is responsible for 20% of the daily trading of the German DAX Index, as well as large transactions in the US options market.

To make this story even better, FINAL has set up a parent company called Final Inc in one of the tax shelter countries, to save on capital gains tax. The company’s investors include the founders (40%),  Dr Yoav Ben Dror (formerly on the board of Cellcom and Dobek), FINAL is run today by Gideon Bar Sinai, formerly a manager at Comverse. Not all is rose though. Despite the success of the company, shareholders have complained on the size of their dividends and the future direction of the company.

Finals offices in Herzliya, Israel

Final's offices in Herzliya, Israel

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June 11, 2009 | View Comments
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  • http://www.israelinnovation20.com/2009/06/14/vc-funding-and-10-israel-related-headlines-week-of-june-7-2009/ VC funding and 10 Israel-related headlines, Week of June 7, 2009 : Israel Innovation 2.0

    [...] 8. The ‘Final’ Frontier of Algorithmic Trading [...]

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    Smart guys!

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    Smart guys!

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    Israel prevails !!!

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