27 October 2016
Monthly Notification, Saxo Bank
Market conduct informationGlobal financial regulatory bodies are increasingly focused on market conduct rules across the financial markets and products. ...
Market conduct information
Global financial regulatory bodies are increasingly focused on market conduct rules across the financial markets and products. Consequently new financial regulation comes into force on an ongoing basis, and most recently through the introduction of Market Abuse Regulation.
It is therefore essential that you, as a valued IB client of Saxo Bank A/S, receive information on and gain insight into which part of the said rules and regulations you are required to comply with and understand. Full compliance with the rules and regulations is needed not only by yourselves, but more importantly our mutual clients, where applicable. Below, you will find an overall description of the rules. You will also find a non-exhaustive list describing situations which you need to avoid as these constitute violations of market rules.
Market conduct rules
Regulation of the financial markets and market conduct rules are aimed at ensuring trust and integrity and thus promoting integrated, efficient and transparent markets. Specific rules set forth unacceptable market conduct by prohibiting the abuse of insider information and various forms of market manipulation. The exchanges/trading venues may have specific rules about market disruption so at the end of this document you will find links to the relevant sites. One example of such rules is that some exchanges have specific limits for the size of positions in various derivatives.
Market conduct rules and regulation applies to all individuals and all legal entities. Therefore all market participants are obliged to familiarise themselves with the relevant rules and regulations. It should be noted that the responsibility of complying with the specific rules lies solely with the individual market participant, i.e. you as our client and more importantly the dissemination of said information to our mutual clients.
Trading activity is being monitored and any suspicious activity will be investigated by the relevant markets and authorities.
The following is a non-exhaustive list of examples of conduct that violate market conduct rules:
- Taking advantage of price sensitive non-published information concerning a company in order to make a profit or avoid incurring losses by buying or selling stocks and/derivatives or to attempt to take advantage of the said information in any other way (insider trading).
- Passing on insider information.
- Disseminating false or misleading information on circumstances of substantial importance for the valuation of a security (e.g. a company’s earnings, orders or product pipeline or a general supply shortage).
- Disseminating false or misleading information, rumors or messages that may influence the price of a security with the intent to exploit the resulting price movement.
- Entering low-volume purchase orders with successively higher prices in order to
Simulate an increased demand amid rising prices (painting the tape).
- Simultaneously buying and selling the same securities for the account of one and the same beneficial owner in order to create false or misleading signals regarding the supply of, demand for, or market price of securities (wash trades).
- To distort liquidity or prices by entering equal but opposite buy and sell orders in the same security by prior mutual agreement between a number of parties (matched orders or daisy chains coordinated among a number of parties).
- Constricting the market by building up large positions (cornering) or depositing securities with third parties (parking) in order to distort securities prices (creating a squeeze).
- Buying or selling securities shortly before the exchange closes with the intent to influence closing prices (marking the close).
- Buying or selling securities in order to move prices (ramping) or keep them at a specific level (e.g. capping, pegging).
- Influencing commodity prices in order to give out false or misleading signals regarding the supply of, or demand for, securities.
- Placing orders but with no intention to execute (spoofing).
- Similar to spoofing, market participants “layer” or “bait” other market participants to react and trade with bona fide order on the other side of the market without intention to trade (layering).
- Attempting to push down the price of a stock by heavy selling or short selling (bear raiding).
For further information regarding market regulations and practices for various exchanges, please click