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?
- ACompliant liquidity provision
- BLegitimate market making
- CQuote stuffing, a prohibited market manipulation tactic✓ Correct answer
- DShort-selling
Explanation
Why C — Quote 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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