Kunal Kumar, Dr. Ram Manohar Lohiya National Law University, Lucknow
ABSTRACT
Market regulators and exchanges have proposed anti-fraud measures to increase supervision at the order level to deter "noisemakers" in the market. The new restrictions came into effect on April 5. The new method aims to prevent manipulation in the stock market. Excessive cancellation of large orders leads to price manipulation, which affects ordinary investors. At the joint meeting, Sebi and the exchange decided to strengthen the order-level monitoring mechanism and additional order-based monitoring measures to discourage the implementation of continuous noise makers.
Spoofing is a way in which a trader creates artificial orders added to the orderbook with no intention to get filled on one of the sides. It represents the false/ artificial representation of the market. The mens rea behind this is to manipulate the market and affect strength of one side to get filled on the other side of the orderbook at a better price by using algorithm.
SEBI recommends some steps to resolve market quality, market integrity, and fairness issues caused by the use of algorithmic trading and placement in the Indian stock market.
Keywords: Regulators, Exchanges, Spoofing, Manipulation, Mechanism, Noise makers, Orderbook Algorithm Trading.
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