Quote Stuffing

Quote Stuffing

A practice of placing an unusual number of buy or sell orders on a particular security and then immediately canceling them. This can create confusion in the market and trading opportunities for algorithmic traders.
References in periodicals archive ?
We find that quote stuffing is pervasive and that over 74% of US exchange-listed securities experienced at least one episode during 2010.
Quote stuffing is the practice where a large number of orders to buy or sell securities are placed and then canceled almost immediately.
Although quote stuffing is often linked to high-frequency trading (HFT), smart order routers and other algorithmic traders, who are not high-frequency traders, may also be quote stuffing.
Brogaard (2010) explains that latency arbitrage opportunities from quote stuffing may arise from requiring other traders to process large amounts of volume, giving the high-frequency trader submitting the orders an advantage.
Thus, quote stuffing may exhibit some market-degrading features (and could be creating the latency arbitrage opportunities described by Brogaard, 2010 and Biais and Woolley, 2011).
Whereas quote stuffing is frequently employed as a denial-of-service attack with an attempt to slow down the market, layering is a way of getting good execution on a trade that was planned before the layering occurred (Salmon, 2010).
The authors find evidence that NASDAQ stocks have an abnormal amount of correlation with other stocks handled by the same channel, consistent with single-venue quote stuffing.
6) Considering the fragmentation of order flow in US markets, we believe that we will glean a more complete picture of quote stuffing and the existing market conditions by using data from all US exchanges.
Quote stuffing is likely to involve order-submission strategies that span multiple trading venues, possibly in an attempt to exploit inefficiencies that may arise in prices across exchanges.
Quote stuffing Placing and quickly rescinding a large number of buy or sell orders to confuse or slow down rival traders.
The ultimate aim is to discourage abusive practices, such as quote stuffing, which consists of placing orders at incredible speed (ie thousands per second) to disrupt the working of the market and thus gain an advantage.
In her speech, Schapiro also acknowledged worries about the role of high-frequency traders, in particular, the practice of quote stuffing, i.