Spoofing and Layering

What this video covers

• The definition of spoofing as placing orders to buy or sell a security with the intent to cancel before execution
• How spoofing creates a false impression of supply or demand and the three-step mechanical scheme (fake orders, price move, cancel and trade opposite side)
• The definition of layering as a variation of spoofing using orders at multiple price levels with identical intent to cancel
• The critical distinction spoofing at one price level versus layering at multiple price levels, and why both are equally prohibited
• The Uniform Securities Act antifraud provisions that prohibit both devices as manipulative and deceptive, and the state Administrator's power to pursue criminal penalties for willful violations
• The intent exam trap: why a good faith limit order canceled due to changed market conditions is not spoofing, and how to identify malicious intent to manipulate