Market Abuse “Cross Washing”

“Cross Washing” definition (or Wash Trading) :

Cross-washing is a fraudulent practice on the financial markets that involves the simultaneous or veryclose buying and selling of the same financial asset by a trader or entity. The main objective of cross-washing is to create an artificial illusion of trading volume and activity on the market in order to deceive other participants.

Key Characteristics of “Cross-washing”:

1. Coordinated Transactions :

The trader or entity simultaneously or nearsimultaneously executes buy and sell orders for the same financial asset. These transactions are coordinated to create the appearance of genuine interest in the asset.

2. Absence of Real Intent :

Unlike legitimate trading, there is typically no real intention to take a long (buyer) or short (seller) position on the asset. The trades are solely designed to create a false impression of activity.

3. Creating an Illusion of Activity :

Cross-wash trades are designed to deceive other market participants. When these participants see large volumes of the asset being traded, they may be induced to enter the market or adjust their own positions in response to this false activity.