The identification of trading activity where an investor simultaneously buys and sells the same financial instrument to create misleading market activity without genuine change in ownership.
Mechanism
Detection systems analyze trading data for patterns indicating matching buy and sell orders from the same entity or closely associated entities, often looking for immediate execution at similar prices and volumes. This behavior is designed to manipulate market perception.
Methodology
Regulatory bodies and exchange surveillance departments employ sophisticated algorithms and statistical models to identify these manipulative trading practices. This ensures fair and transparent market operations by penalizing those who artificially inflate trading volumes or prices.
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