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28 Ways 'They' Rig The Market

Via Nanex,

Rigged - Financial Word of the Year

What do people mean when they say the Stock Market is rigged? Below is a definition along with many examples that would lead reasonable people to conclude that the market is rigged.

Definition

Rig

 

rigged, past tense of rig

 

1. Used to describe situations where unfair advantages are given to one side of a conflict.

2. Describes the side of a conflict that holds an unfair advantage.

Use in a Sentence

Despite costing taxpayers billions of dollars during the financial crisis, Wall Street decided to change nothing about the rigged market. In fact, Wall Street is known to have rigged the equity market, FX market, Libor, and the Commodities market since the financial crisis.

Examples

  1. To falsely represent that a trading algorithm is capable of making decisions based on real time information.
  2. To falsely represent that profiling of certain participants leads to the protection of investor orders on a particular venue.
  3. To falsely represent that a broker’s router is unbiased in its treatment of all trading venues.
  4. To falsely represent the extent to which an investor interacts with a type of market participant.
  5. To falsely represent that certain participants have been removed from a venue.
  6. To falsely represent the functionality of a venue to investors.
  7. To knowingly allow select participants to enter orders on a venue in a manner that is in direct violation of US regulation.
  8. To willfully ignore the possibility of a broker achieving a better execution outcome for an investor.
  9. To willfully obstruct the quality of executions on a venue in a manner intended to improve the relative appearance of a brokers own venue.
  10. To willfully send an order(s) to a venue(s) in a manner that would reasonably inhibit the probability of executing an order on a venue.
  11. To willfully route investor orders to an offshore affiliate for the purposes of allowing the offshore affiliate to generate a profit via mark-up or mark-down.
  12. To willfully route investor orders to an affiliate entity for the purposes of providing that affiliate entity with an opportunity to profit ahead of the execution of that investor order.
  13. To willfully provide knowledge of unexecuted trading interest on a given venue to an independent routing facility of an affiliate or partner in a manner that gives that affiliate or partner an advantage over other participants.
  14. To willfully notify a select group of participants of the unexecuted interest of an investor order in a manner that could be reasonably expected to negatively affect the economic outcome for that investor.
  15. To willfully send investor orders to an intermediary, ahead of any interaction with other natural investors, and in a manner that could be reasonably expected to result in an inferior economic outcome relative to interaction with other natural investors.
  16. To willfully send orders to a venue(s) for the purposes of achieving an economic benefit to a broker in a manner that could reasonably be expected to be detrimental to the economic outcome of an investor.
  17. To willfully manipulate the opening or closing price of security.
  18. To willfully allow the manipulation of the opening or closing price of one or more securities for a period of time in a manner where any reasonable person familiar with the arts would have identified that pattern of manipulation.
  19. To willfully allow a 3rd party participant to utilize a function designed for use by a specific type of market participant on a venue; but is otherwise resold by that market participant to a 3rd party in a manner that provides that 3rd party an improved queue position on an exchange.
  20. To willfully disseminate market data from a venue to a select group of participants at transmission speeds that could be reasonably expected to allow those participants to effect executions on the venue at outdated prices.
  21. To willfully provide trading access to domestic or overseas participants without the provision of risk safeguards required to be in accordance with US regulation.
  22. To willfully obfuscate the manner in which order types work in a regulatory filing while concurrently providing select participants a more comprehensive understanding of the functionality.
  23. To willfully misrepresent the concentration of a select group of participants on a publicly traded exchange in an attempt to mislead investors from the potential revenue at risk as a result of any regulatory change affecting those participants.
  24. To willfully provide a select group of participants with characteristics of investor order flow that would increase the probability of those participants interacting with a type of investor order in a manner where those participants would be expected to profit from that information.
  25. To obstruct an investigation or expected investigation through the destruction of data that is otherwise required to be archived in accordance with the oversight and regulation of a trading venue.
  26. To unreasonably prohibit certain participants from understanding or utilizing functionality on a venue that is otherwise available to select participants.
  27. To purposefully expunge source code in a manner that would obstruct an investigation or an expected investigation into manipulative trading practices.
  28. To willfully allow orders to be exclusively routed to intermediaries or to venues that cater to intermediaries while acting as a fiduciary.