Momentum ignition

Definition

Entering orders to trade or a series of orders to trade, or executing transactions or series of transactions, likely to start or exacerbate a trend and to encourage other participants to accelerate or extend the trend in order to create an opportunity to close out or open a position at a favourable price. Momentum ignition may also be illustrated by the high ratio of cancelled orders (e.g. order to trade ratio) which may be combined with a ratio on volume (e.g. number of financial instruments per order).

Surveillance

Effective implementation of surveillance alerts for momentum ignition requires capturing the following trade data:

  • trade data

  • order and quote data including unexecuted quotes and orders

  • intra day price data

Surveillance alerts detecting momentum ignition should consider short term changes to prices against own trading activity (including unexecuted orders and quotes).

Regulatory source

Entering orders to trade or a series of orders to trade, or executing transactions or series of transactions, likely to start or exacerbate a trend and to encourage other participants to accelerate or extend the trend in order to create an opportunity to close out or open a position at a favourable price — usually known as momentum ignition. This practice may also be illustrated by the high ratio of cancelled orders (e.g. order to trade ratio) which may be combined with a ratio on volume (e.g. number of financial instruments per order).

COMMISSION DELEGATED REGULATION (EU) 2016/522, Annex II, Section I, 4 (e)