PilotFish 23 Posted February 12, 2020 Quote “Spoofing” and “layering” are both forms of market manipulation whereby a trader uses visible non-bona fide orders to deceive other traders as to the true levels of supply or demand in the market. Some regulators use the terms “spoofing” and “layering” interchangeably, while others, including FINRA, use “layering” to describe entering multiple non-bona fide orders at multiple price tiers, and “spoofing” to describe entering one or more non-bona fide orders at the top of the order book only. In spoofing patterns, a trader enters a single visible order, or a series of visible orders, that either creates a new best bid or offer or adds significantly to the liquidity displayed at the existing best bid or offer. During the lifespan of that first order(s), or within a short time after it is cancelled, the same trader executes a trade on the opposite side of the market. The pattern is manipulative because the execution occurs at a more favorable price than the trader was likely to obtain in the absence of the first order(s). This is true regardless of whether the buy (sell) execution occurs at the pre-sequence best bid (offer) price, at the midpoint, or at the new best offer (bid) price set by the spoof order. In any of those scenarios, the trader is executed at price better than if he had hit the pre-spoof bid or had taken the pre-spoof offer. Read more here: https://www.trlm.com/knowledgebase/makes-spoofing-different-layering/ Share this post Link to post Share on other sites
