Excessive bid-offer spreads

Definition

moving the bid-offer spread to and/or maintaining it at artificial levels, by abusing of market power, usually known as excessive bid-offer spreads. This practice may also be illustrated by the following additional indicators of market manipulation:

Surveillance

Effective implementation of surveillance alerts for excessive bid-offer spreads requires capturing the following trade data:

Surveillance alerts to detect excessive bid offer spreads can also consider specific venue rules defining maximum bid-offer spreads for market makers and compare them against own market making activity.

Regulatory source

Moving the bid-offer spread to and/or maintaining it at artificial levels, by abusing of market power, usually known as excessive bid-offer spreads. This practice may also be illustrated by the following additional indicators of market manipulation:

(i) transactions or orders to trade which have the effect of, or are likely to have the effect of bypassing the trading safeguards of the market (e.g. price limits, volume limits, bid/offer spread parameters, etc.);

(ii) the indicator set out in Point 2(c)(i) of this Section.

COMMISSION DELEGATED REGULATION (EU) 2016/522, Annex II, Section I, 6 (c)