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April 05, 2021
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) |
