Market Manipulation and Abuse in Cryptocurrencies and Electronic Markets

Project: Research

Project Details


The goal of the project is to formally define market manipulation and abuse in high frequency trading and to test whether some electronic markets are prone to market manipulation. Market manipulation means that some economic agent sends orders to the market in order to create a fictitious snapshot of the market conditions. The intention is to induce other agents to place orders that will result in a profit for the market manipulator. Such “manipulating” orders are fictitious because they are unlikely to be filled, but create a false view of the demand and supply schedule in the market. This practice is often referred to as spoofing. Such practice is unlawful in regulated electronic markets, and discouraged in unregulated markets such as foreign exchange. However, trading in cryptocurrencies such as bitcoins happens in completely unregulated markets where such practice can freely be used. Data availability in these markets provides a unique comparative framework on which to devise theories, statistics and tests for market manipulation.
Short titleMarket Abuse
StatusNot started