Spoofers Beware! New Surveillance Rules are Here!
Spoofers refer to traders who place bulk orders, and then intentionally cancel them before they are executed. This practice – Spoofing – is aimed at creating an unreal demand or supply situation, so as to cause sharp price swings.
As per the Circular dated 26-Mar-21, Stock exchanges have put in place a new order-level surveillance mechanism to curb activities such as Spoofing.
Effective from 5-Apr-21, the new guidelines shall be applicable on the daily trading activity at both levels - customer & broker. These new measures will be based on the following parameters and the first surveillance action on such Persistent Noise Creators shall be on May 05, 2021
- High Order to Trade Ratio (OTR) in value terms (i.e. Value of all Orders Entered /Modified/Cancelled in a Security / Contract)
- High Number/Instances of Order Modifications, and
- High percentage of Order Modifications
A violation of the above three conditions will be considered as 1 instance, and based on the number of instances the below surveillance action will be taken.
|Number of Instances|
(on a Rolling 20 trading days basis)
|Applicable Trading Disablement Time|
|Upto 99 instances||NIL|
|100 (99 + 1)||first 15 minutes of the next trading day|
|101 (99 + 2)||15 mins x 2 = 30 minutes|
|102 (99 + 3)||15 mins x 3 = 45 minutes|
|103 (99 + 4)||15 mins x 4 = 60 minutes|
|104 (99 + 5)||15 mins x 5 = 75 minutes|
|105 (99 + 6)||15 mins x 6 = 90 minutes|
|106 (99 + 7)||15 mins x 7 = 105 minutes|
|107 (99 + 8) & Above||15 mins x 8 = 120 minutes (maximum disablement)|