SCA Market Surveillance & Manipulation

Question 1

What is 'front running' in securities markets?

Accepted Answer

Trading securities for one's own account before executing a large client order, benefiting from the price movement that the client order will cause

Answer

Being the first firm to launch a new product

Answer

Running to execute trades faster than competitors

Answer

Opening the market in the morning

Question 2

What is 'wash trading'?

Accepted Answer

Simultaneous buying and selling of the same security to create an artificial appearance of trading activity without a genuine change in ownership

Answer

Cleaning up a trading system's technical errors

Answer

Trading in foreign currency

Answer

Settling trades using cash

Question 3

What is 'pump and dump' market manipulation?

Accepted Answer

Artificially inflating a stock's price through false statements/hype (pump), then selling at the inflated price (dump), leaving other investors with losses

Answer

A legitimate volatility strategy

Answer

A method of short selling

Answer

A strategy for value investors

Question 4

What is 'spoofing' in financial markets?

Accepted Answer

Placing large orders with the intention of canceling them before execution to create a false impression of supply/demand and move prices

Answer

Creating fake broker accounts

Answer

Sending spam emails to investors

Answer

Hiding the true ownership of shares

Question 5

How does the SCA detect market manipulation?

Accepted Answer

Through automated surveillance systems that monitor trading patterns, unusual volume, price movements, and flagged transactions

Answer

By relying solely on investor complaints

Answer

By auditing only the largest brokers annually

Answer

The SCA does not have surveillance capabilities

Question 6

What is 'layering' in market manipulation?

Accepted Answer

Placing multiple orders at different price levels that are not intended to be executed, to create a false appearance of market depth

Answer

Structuring a firm in multiple legal entities

Answer

Diversifying a portfolio across sectors

Answer

Listing a company on multiple exchanges