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

Front running is the prohibited practice where a broker or trader executes trades in their own account knowing that a large client order is about to move the market price, allowing them to profit at the client's expense.

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

Wash trading involves a party simultaneously buying and selling the same security, creating false impressions of trading volume and activity without any real transfer of ownership. It is a form of market manipulation prohibited by UAE law.

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

Pump and dump involves artificially inflating a stock's price through misleading or false promotional statements, then selling shares at the inflated price. When the promoters sell, the price collapses, leaving other investors with losses.

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

Spoofing involves placing large buy or sell orders to create a false impression of market demand or supply, then canceling the orders before execution. It manipulates other traders into reacting to false signals.

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

The SCA employs sophisticated market surveillance systems that continuously monitor trading activity for suspicious patterns, unusual volumes, price movements, and relationships between traders — triggering investigations when anomalies are detected.

SCA Practice Test

SCA Practice Test

SCA Market Surveillance & Manipulation