Market Manipulation
Any conduct that artificially affects the price, supply or volume of a financial instrument away from its fair, market-driven level.
Definition
Market manipulation is the umbrella concept that covers any practice intended to artificially affect price, supply or trading volume in a financial instrument or its underlying. Under EU MAR it includes actual or attempted manipulation, and it does not require the manipulator to actually profit - the misleading impression itself is the offence.
Sub-typologies
- Wash trading - fake volume.
- Spoofing - fake liquidity.
- Layering (markets) - stacked spoofed orders on one side of the book.
- Pump and dump - hype-driven price manipulation.
- Quote stuffing - overwhelming the venue with messages.
- Marking the close - concentrated trading at the closing auction to push the print.
- Benchmark manipulation - submitting misleading inputs to fixings (LIBOR-style).
Regulatory anchor
EU MAR 596/2014 Articles 12 and 15; MiFID II Article 17; MiCA Title VI for crypto-assets; ESMA technical standards on detection and reporting; equivalents in the UK (FSMA Part 8), US (SEC Rule 10b-5, CEA), Singapore (SFA Part XII).
Reporting obligation
Any reasonable suspicion of market manipulation must be reported via a STOR to the relevant national competent authority. Failure to maintain effective surveillance and STOR filing is itself a sanctionable breach.