Thanks for your input Sharks. I should make it clear that I'm not "against" instos or bots per se, but rather I'm suggesting that the laws regarding market manipulation are quite specific and in place for a very good reason. Such laws do, or at least should apply to all market participants equally. They are enshrined within the corporations act because in the past it has been proven that using such tactics provided an unfair advantage and undermined the integrity of the market. Lawmakers saw fit to legislate against such practices and we know how hard it is to get them to do anything other than dream up new taxes, so they obviously didn't think it was a trivial issue either.
We all see trades in this stock and many others such stocks which on face value would appear to have the effect on contravening some specific laws as specified in the corporations act, some of which I mentioned in my earlier post. I suggest that this results in artificially lower share prices on many occasions.
Let's face it, the "share price" quoted is nothing more than the unit price associated with the last trade, but that price has a major impact of stock sentiment which is why share price manipulation is illegal. In small cap stocks where transaction volumes are often small, an order which is artificially broken down and executed as loads of tiny transactions of an unmarketable size spread across hours or even days can have the effect of "setting" the market price and overriding the last trade price set by genuine trades that happen less frequently. With regard to bots we typically see them having such impacts when they are setup with regular time intervals between individual trades, or the trigger bot which wakes up as soon as a genuine order goes through on market and moves the price away from the bot's last trade price. This would appear to fall within the definition of price manipulation under the corporations act as previously described.
I see no genuine reason to be allowed to unnecessarily break an order down into unmarketable parcels. Unmarketable parcel should only be allowed to be traded when they are the residual from a previous partially sold parcel or where the parcel constitutes the entire parcel owned by the entity selling, as per the principles of "marketable parcels".
I can see that its easy for a specific concern such as what I have attempted to raise here for conversation, to be misconstrued as a general hatred for something and as such I should be more specific about my concerns and the type of behaviour that appears to be in contravention of the price manipulation laws put forth in the corporations act. I hope the above helps to describe one of the types of perceived manipulation that are commonly observed of posters here and described on many occasions. Said description isn't my only concern but for the purpose of being concise I hope that it helps to differentiate what I believe to be troubling trades from otherwise normal and warranted activity within the market.
The above said, a picture is worth a thousand words so I have attached a graphic of the market depth and trade sequence from this morning to demonstrate why these trades are perceived as being in contravention of the corporations act. Its not a perfect example but it gives you the idea of what I talking about and its what is happening right here and now.
Note in the above image a buyer comes in and snaps up 200,000 shares from the buy queue which raises the share price from 10.5c to 11c. This buy order matches multiple sellers parcels thus is executed as a series of trades totalling 200,000 shares. Within 1 second there is suddenly a sell order of a unmarketable size dropped into the sell queue at 10.5c thus bringing the share price back down again. That was a bit quick wasn't it ? One second ! There are plenty of other buyers at 10.5c so where is the rest of the stock from this sale transaction if it is a genuine one ?
So then another buyer comes into the market. This time the buyer is a lot bigger and orders 1 million shares. This wipes out all the sellers at 11c and leaves residual orders in the buy queue at 11c. Other buyers then line up behind that new mark at 11c. Note the bot can't drive the price back down due to the size of the 11c orders so it doesn't place a sell order. It has to sit and wait for another opportunity.
If there was ever an example of flagrantly ignoring the rules surely this 50c sell order for 1 SSN option at a 500% premium to the current market price is it. The reason it is there is obvious and specific rules were introduced to prohibit this type of thing but plain as day, there it is.
Now there are hundreds of examples of the above pattern and I'm sure some will be genuine anomalies but I don't believe that they all are. Its it my understanding that performing a trade for the purpose of setting the share price or maintaining a share price is a breach of the corporations act as previously described. If I had access to all of the data for a given stock over a period of days or weeks I believe we are likely to be able to demonstrate instances where these observations are possibly more than just anomalies.
I do not intent to tar a feather all insto or all bots for the percieved transgretions of a few but the fact that most probably do the right thing isn't sufficient excuse to not question the antics of those that appear to be in the wrong.
Am I wrong to point this out or at least ask the question? If the law is being broken is it appropriate to just turn a blind eye as long as it doesn't impact us directly ? Do laws only matter when violations hurt us personally. Do we have the right to later complain when it does hurt us if we have known about it and ignored it previously ?
I guess I'm just asking the question. Not having a go. There are loads of people on this forum this have heard of bots but have no background knowledge about what they are or what they do. We see posts from them all the time. While the perceived transgretions that I point out certainly aren't the only things bots do, and I don't presume to say that all bots do this, any inappropriate and possibly illegal behaviour certainly shouldn't be tollerated in my opinion. Ignoring it is condoning it.
The above pics are for illustration purposes only.
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