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SIE: Prohibited Activities & Ethics
SIE practice questionhardMarket Manipulation - Quote Stuffing

A high-frequency trading firm floods the market with numerous orders it intends to cancel immediately, aiming to slow down other traders’ systems. What is this action called?

  1. ACompliant liquidity provision
  2. BLegitimate market making
  3. CQuote stuffing, a prohibited market manipulation tactic✓ Correct answer
  4. DShort-selling
Explanation

Why CQuote stuffing, a prohibited market manipulation tactic

Quote stuffing involves placing rapid-fire orders to disrupt market operations, which is illegal. Market making and liquidity provision require bona fide interest, not system abuse.

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