Market Manipulation Hits Record High

Market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances with respect to the price of, or market for, a product, security or commodity.

822 reports of suspected manipulation were made to the Financial Conduct Authority last year by market participants, suggesting that the problem is far from being eradicated.

The FCA is a financial regulatory body in the UK, but operates independently of the Government, and is financed by charging fees to members of the financial services industry.

Market manipulation is the attempt to artificially increase or decrease the price of an asset, index or its derivative in order to make a gain.

Following the LIBOR scandal that broke in 2012, the laws relating to manipulation were significantly tightened up. This included criminalising the attempted manipulation of benchmarks.

Market manipulation has been investigated by regulators in a wide range of asset classes, including bonds, Forex, oil, gold, silver, palladium and platinum.

However, 60% of reports to the FCA last year related to suspected manipulation of equities and equity derivatives.

RPC says that reports of manipulation are likely to have been made by brokers, trading houses and fund managers who identify suspicious price movements or order flows being posted by other market participants.