Maybe ASX and ASIC should study bot activity, as most of the activities listed are commonly employed by bots.
For your information, we outline below some of the activities which may be viewed by ASX or ASIC as Market Manipulation. Please note that this information is provided for information purposes and may not be exhaustive.
• Fictitious Orders This involves placing a large order or orders on one side of the market to create an illusion of depth and liquidity, to facilitate a designated trade on the other side of the market.
• Layering This occurs where multiple orders are entered for the same account at various price levels, with the orders representing a significant number of orders in the bid/ask schedule. Whilst in some cases this pattern of trading may be a legitimate strategy (for example when a client is looking to break up a large order), this will be viewed as creating a false and misleading market if each of these orders does not represent a genuine intention to trade.
• Ramping Where, during normal market hours, orders are placed in such a way as to suggest that there is a greater depth and volume of interest than there actually is.
• Giving up priority / window dressing Where a bid and or ask order is entered for a significant quantity of stock at a price away from priority, which is cancelled as it gains in priority. This may be a legitimate strategy where for instance buy orders are cancelled in a falling market. However should such orders not reflect a true intention to trade, this practice will be regarded as creating a false market.
• Spoofing During the market auction periods, an order can be entered into the market with there being no immediate possibility of the order being executed. This provides the opportunity for the entry of fictitious orders, designed to mislead the market as to the depth and volume of interest, with the order/s being deleted shortly before trade commences.
• No change of beneficial ownership. A transaction involves no change in beneficial ownership if a person (or that person’s associate/s), is on both sides of the transaction, (i.e. both the buyer and the seller).
• Wash Sales This involves buying and selling a share at the same price so as to significantly increase the trading volume in order to attract new buying interest.
• Marking the Close Where an order is placed in an attempt to artificially influence the closing price of the security, this may have an impact on the security during the subsequent trading day and as such can be regarded as manipulative trading.
