Below, we have set out a non-exhaustive list of scenarios which need to be avoided as these constitute violations of market rules.The aim of Market conduct rules is to protect as well as to promote efficient and transparent financial markets. Specific regulations set out specific market conduct that is unacceptable including the abuse of insider information but also other types of market manipulation. Individual Exchanges will also have individual rules about market disruption. Market conduct rules and regulations apply to individuals as well as entities and anyone trading has an obligation to read and understand these rules and regulations. Trading activity is monitored by market authorities for signs of suspicious activity which, when flagged, are then investigated.
A few examples of conduct that violate market rules are shown below:
- Taking advantage of price sensitive information that has not been published concerning listed companies in order to profit or to avoid losses by buying or selling related securities.
- Passing on insider information.
- Disseminating false or misleading information on listed companies.
- Disseminating false or misleading information that may influence the price of a security so as to profit from the resulting price distortion.
- Entering low-volume purchase orders to create a stairway of higher prices in order to simulate increased demand as well as rising prices.
- Buying and selling securities to create a misleading impression of demand for same.
- Distortion of liquidity or prices of securities.
- Building up large positions artificially or falsely to distort security prices.
- Buying or selling a security before market closes to influence closing prices.
- Buying or selling a security to ramp up its price or to keep it at a specific level.
- Influencing a commodity price to consequently give out false or misleading information.
- Placing an order but with no intention of executing same.
- Creating layers of orders to self-trade to project a misleading impression of the market for a security.
- Trying to distort the price of a stock by heavy selling or by short selling.