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:

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)