Paper Title
How to Regulate Spoofing
Abstract
The purpose of this study is to assess the order-to-trade ratio and resting time regulations recently enacted by the
European Commission. We proceed with examining the background of spoofing. The examination uncovers that the
incomplete display of limit order information by the stock exchange provides the key to spoofing that is essentially
manipulation of the limit order display. Therefore, the effectiveness of the order-to-trade ratio and resting time regulations
are limited since neither of them targets the incomplete display of limit orders.
Keywords- Flash Crash, high-frequency trading, spoofing, order-to-trade ratio, resting time, complete display of order information.