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Examination of Trades (Market Surveillance)

Unfair trading prohibited by Article 116 of the Commodity Derivatives Act are generally explained as follows.

[Excerpt from the Commodity Derivatives Act]
(Prohibition of wash trading, accommodation trading, etc.)
Article 116 No person may conduct the following acts:

(i) With regard to Transactions on a Commodity Market, carrying out buying and selling transactions without the intention to transfer ownership of a Listed Commodity;
(ii) With regard to Transactions on a Commodity Market, carrying out wash trading or carrying out transactions by deceptively avoiding the use of the person’s own name;
(iii) With regard to transactions on a Commodity Market, filing an application for said person’s own transactions by conspiring in advance with another person that such other person would file an application for concluding said transactions at an identical amount of consideration or Contract Price, etc.at the same time as said transactions;
(iv) With regard to Transactions on a Commodity Market, carrying out a series of transactions that would cause people to believe mistakenly that the Transactions on a Commodity Market are thriving or carrying out a series of transactions that would change the quotations on said Commodity Market, either independently or jointly with another person;
(v) Consigning or brokering any of the acts listed in the preceding items or acting as an intermediary for such consignment;
(vi) Carrying out buying and selling of Listed Commodities Component Products or Listed Commodity Indexes Component Products or other transactions off the Commodity Market with intent to fluctuate the quotations on a Commodity Market, when carrying out Transactions on said Commodity Market;
(vii) With regard to Transactions on a Commodity Market, spreading information that the quotations on a Commodity Market would change through market manipulation by said person or another person; and
(viii) Intentionally making misrepresentation or a representation that would cause a misunderstanding with regard to important matters when carrying out Transactions on a Commodity Market.

1. Market manipulation by fake trading (Items (i) through (iii))

  • Acts involving transfer of ownership in form, but not constituting buying and selling transactions in substance;
  • Acts designed to achieve an objective other than buying or selling by disguising them as buying or selling transactions even though such form should not be taken (wash trading); and
  • Acts of executing trades by conspiring with another person and disrupting the market price formation (accommodation trading)

2. Market manipulation by actual trades (Item (iv))

  • Acts of carrying out a series of transactions that would cause people to believe mistakenly that the transactions on a commodity market are thriving or carrying out a series of transactions that would change the quotations on said commodity market, either independently or jointly with another person.

3. Market manipulation through consignment or broking (Item (v))

  • Acts of consigning or broking of any of the acts listed in 1. or 2. above.

4. Market manipulation through trades outside the commodity market (Item (vi))

  • Acts of manipulating prices of transactions in a commodities market through physical delivery transactions, etc. off the commodity market.

5. Market manipulation by representation (Items (vii) and (viii))

  • Acts of spreading to many and unspecified persons information that the quotations on a commodity market would change through market manipulation by oneself or another person; and
  • Acts of intentionally making misrepresentation or a representation that would cause a misunderstanding with regard to the matters that would serve as the judgment criteria on whether to enter into trade.