Define “Spoofing” and “Wash Trading” in the Context of Derivatives Market Manipulation

Spoofing is a manipulative practice where a trader places large orders without the intent to execute them, aiming to mislead other market participants about supply or demand, and then cancels the orders before execution. Wash trading involves a trader simultaneously buying and selling the same asset to create a misleading impression of high trading volume and liquidity.

Both are illegal in regulated markets.