Market abuse risks

Insider dealing and unlawful disclosure

• insider dealing

• unlawful disclosure of inside information

Market manipulation

Market manipulation encompass a wide range of potential behaviours. Examples of market manipulation are set out below:

False or misleading signals and price securing

• Abusive squeeze

• Advancing the bid

• Colluding in the after-market of an initial public offer

• Concealing ownership

• Creation of a floor, or a ceiling in the price pattern

• Distorting costs of commodity contracts

• Excessive bid offer spreads

• Improper matched orders

• Inter-trading venues manipulation

• Layering and spoofing

• Marking the close

• Painting the tape

• Phishing

• Ping orders

• Placing orders with no intention of executing them

• Pump and dump

• Quote stuffing

• Smoking

• Trash and cash

• Wash trades

Manipulative behaviours relating to the employment of a fictitious device or any other form of deception of contrivance

• Dissemination of false or misleading market information

• Movement of an empty cargo ship

• Movement or storage of physical commodities

• Opening a position and closing it immediately after its public disclosure

FCA FX specified risk

FCA oversaw a market wide remediation programme following the FX trading scandal. Through their remediation programme, FCA set out behaviours and risks that span across market manipulation and inappropriate order handling. FCA focused on the following unacceptable behaviours:

• attempting to manipulate or control fixes

• misleading clients by implying they are getting the best rate, when in fact the rate they received may have included a significant 'hard mark-up'

• engaging in coordinated trading to gain an unfair advantage

• performing partial fills of client orders but not passing to the client the correct fill

• using layering or wash trades

• deliberately triggering client stop loss orders

• front running

• sharing confidential information with clients and traders at other firms

• unfairly assigning clients the worst rate available in relation to 'transaction window' trading

• inappropriately using personal dealing accounts, including spread betting

FCA Market Watch 57

• flying prices

• printing trades

FCA Market Watch 58

• manufactured credit event

Other

• following