2 Matching Annotations
  1. Nov 2020
    1. SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY. Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) (as amended by section 746) is amended by adding at the end the following: ‘‘(5) DISRUPTIVE PRACTICES.—It shall be unlawful for any person to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that— ‘‘(A) violates bids or offers; ‘‘(B) demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or ‘‘(C) is, is of the character of, or is commonly known to the trade as, ‘spoofing’ (bidding or offering with the intent to cancel the bid or offer before execution).
    1. Spoofing is an illegal form of market manipulation in which a trader places a large order to buy or sell a financial asset, such as a stock, bond or futures contract, with no intention of executing. By doing so, the trader—or "the spoofer"—creates an artificial impression of high demand for the asset. Simultaneously, the trader places hundreds or even thousands of smaller orders for the same asset, profiting on the increase in price brought about by the large fake order, which is then cancelled. Spoofing is also known as bluffing, and has been around for decades as traders attempt to take advantage of other market players by artificially inflating—or deflating, as the case may be—the price of an asset. The technique has perhaps become more common, or at least gained more notoriety, in the 2010s because of the advent of speedy, high-volume and computer-driven trading systems. During this time, it also attracted the notice of securities regulators and law enforcement officials.[1] Spoofing is considered manipulative because the trader would not have achieved the price on the actual orders without first obtaining that price by virtue of the large bogus order.