easy · Market Microstructure
A spoofing strategy involves a trader placing a 50,000-share sell order at $50.05 while the NBBO is $50.00 × $50.02.
If the trader's actual intent is to buy 5,000 shares at $49.98, how does the 50,000-share order facilitate this?
- By technically satisfying Reg NMS transparency rules.
- By providing genuine liquidity to other buyers.
- By narrowing the bid-ask spread for the whole market temporarily.
- By creating a false impression of heavy selling pressure.
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