Anyone placing opposing orders (buy and sell) close to one another for the same security on the stock exchange in a way that results in them being both the buyer and seller of the executed transaction risks committing prohibited market manipulation. Such self-dealing, where there is no change of beneficial owner, may create an abnormal and artificial price level or send out false or misleading signals about supply and demand for this security. An offence[1], that can result in a severe fine regardless of whether it was committed intentionally, knowingly or unknowingly. In the latest edition of its consumer information series "Let's talk about money!", the FMA therefore explains in a concise and understandable way what is meant by "crossings" in stock exchange transactions, why they are frowned upon and how they can be avoided.
Ignorance is no protection against punishment
The FMA analyses around 100 such suspected cases every year, and subsequently sanctions dozens (of frequently inexperienced) retail investors. Such orders partially occur as a result of ignorance or carelessness. Investors should therefore ensure that:
- buy and sell orders placed in close proximity to one another do not have crossed order limits (e.g. identical limits or cross orders in combination with the “best” order code) that might lead to their reciprocal execution on the stock exchange.
- they do not place any crossed orders outside of trading time that might result in self-dealing occurring in the opening auction of the following trading day.
- they do not use crossings as a substitute for transfers between securities accounts.
There is a large danger, especially by thinly-traded stocks, that opposing orders are executed by the same investor with themselves.
This edition of the FMA publication “Let’s talk about money” can be found at: https://redenwiruebergeld.fma.gv.at/en/crossings
Journalists may address further enquiries to:
Klaus Grubelnik
+43 (0)1 249 59 – 6006
+43 (0)676 – 88 249 516
[email protected]
[1] The offence of market manipulation pursuant to Article 154 para. 1 no. 3 BörseG 2018 in conjunction with Article 12 MAR, forbidden under Article 15 of the Market Abuse Regulation throughout the EU, unless there were legitimate reasons for it, and no breach of accepted market practice had occurred.