Market Surveillance October 2022

New Pump and Dump alert

Pump and dump is a scheme that attempts to boost the price of a security through misleading and exaggerated statements. After driving up the price of a security, the perpetrators of this scheme will reverse their positions at a higher price than the security was when they purchased it. Trash and Cash is the reverse pattern, pushing down a security, buying low and selling high, once the price has normalised.

Our new Pump and Dump/Trash and Cash alert will be a day analytics with no inter-day lookbacks focusing primarily on Equity and ETD markets. After receiving feedback from several clients, we have made significant improvements to the underlying alert logic, including referencing market data to further weed out false positives.

The new alert detects any significant increase in market volumes and then checks for significant market price increase/decrease from the previous intervals. Users can control both these parameters with customised thresholds.

The alert then checks for Buy and Sell trades prior to the detected interval by the same participant and calculates net Buy (Pump)/Sell (Trash) positions. These net positions are then cross checked with their closing positions in the ‘dump’ or ‘cash’ period to see if there was any potential profit made. These net positions are also used to check if these trades were significant enough to move the market.