Standard II(B) Market Manipulation

what is Standard II(B) Market Manipulation

Members and Candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.

What is market manipulation?

Market manipulation occurs when someone intentionally:

• Distorts security prices.

• Distorts trading volume.

• Creates misleading market signals.

• Deceives investors or other market participants.

Intent to mislead is a key factor.

what is Information-Based Manipulation

• Uses false or misleading information to influence market prices.

• Investors are misled by inaccurate information.

• Prices move because of deception rather than fundamentals.

what is a Pump-and-Dump Scheme

• Promote a security using misleading positive information.

• Artificially increase demand and price.

• Sell personal holdings at inflated prices.

This is a violation.

what is Transaction-Based Manipulation

• transactions that artificially affect prices or volume to give the impression of activity or price movement in a financial instrument, which represent a diversion from the expectations of a fair and efficient market, and

• securing a controlling, dominant position in a financial instrument to exploit and manipulate the price of a related derivative and/or the underlying asset.

• Do not engage in trades designed to artificially affect price or volume.

• Do not create a false appearance of market activity.

• Do not attempt to control or corner a market to influence related securities or derivatives.

• Avoid trading strategies whose primary purpose is deception rather than investment.

what is allowed?

• Profiting from perceived market inefficiencies is permitted.

• Trading based on genuine investment views is permitted.