When you sign up for Wealthsimple Trade, you agree to avoid participating in any trading methods that are considered manipulative or misleading. These methods include –
- Creating orders on the marketplace (i.e. a buy or sell of a security) that create or could create a false or misleading appearance of trading activity.
- Activity that could create an artificial price for a security.
These methods are outlined in more detail in the Universal Market Integrity Rules (UMIR) Policy 2.2
Examples of manipulative or misleading trading
Examples of trading activities that are not allowed include –
- Wash trades
A wash trade is a transaction made in the market that results in a security having no change in beneficial or economic ownership. When an individual transacts with the same security between other accounts they own, they may perform a transaction with themselves, which can result in misleading information about the volume of a security.
Layering is when you place a legitimate order on one side of the market and then place several fake orders on the other side of the market without the intention to trade to try and influence the stock price for your legitimate order.
- Quote stuffing
Quote stuffing involves entering trades in the market to intentionally flood the system in order to manipulate the price of the security.
Spoofing involves entering orders you do not intend to be executed before the markets open to try and change the opening price to your advantage.
What happens if I participate in inappropriate trading activity in my account?
Wealthsimple Trade is responsible for making sure our clients follow all marketplace regulations set by the Investment Industry Regulatory Organization of Canada (IIROC) Universal Market Integrity Rules (UMIR). IIROC governs trading practices in Canada.
These responsibilities mean we need to regularly check your Wealthsimple Trade account for manipulative or misleading trading activities. If our team identifies activity that is considered manipulative or deceptive, whether intentional or not, we will take steps to prevent the activity. These steps can include:
- Cancelling your order
- Contacting you via email
- Suspending or terminating your accounts