Repost from ASX General on request (with minor mods):
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I am noticing an alarming trend of bot driven share price manipulation on the microcaps.
The prop bots: buy a small insignificant number of shares: say ten dollars worth every 5 minutes. In some cases these are facilitated by static bid props.
The pressure bots: will sell a small parcel of shares into any gap below the market and into opening and closing auctions to keep a SP as weak as possible without burning a large number of shares. This was seen in the days running up to the AXO T/O.
The price tagging bots: will sell/buy as many shares at at as many levels as possible and as quickly as possible to tag a price level on a graph for 'technical' reasons. This can see an illiquid stock move 20% in 30 seconds, with no price discovery and no warning for other potential bidders to deny them the opportunity to enter buy/sell orders.
The churn bots: will buy and sell shares between independent legal entities to create the illusion of volume coming into a stock. These are typically fired off when someone wants to offload shares and are visible by the sell bots orders overpowering the buy bot orders hoping to pick up 3rd party bidders.
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It is a stretch of the imagination to consider these are 'algorithmic' trading programs that are acting on 3rd party orders. They are clearly pieces of code with direct market access that are given a specific set of instructions to follow to achieve the stated goal, hence manipulative.
Also, in some cases it is implausible that any insto manipulator would have a significant beneficial interest in the stock in question and in some cases the stock has not seen bot action for years, which makes me think that bot operators are hired by a 3rd party to achieve a set outcome.
As far as I know, no retail investors have access to bots, which begs the questions:
Who is operating these bots? - Are these small 'hedge funds' run by dodgy operators from the criminal infested offshore tax havens?
Why does ASIC fail to take action on bot operators? - I do not know of a single prosecution, yet the bot manipulation is rife on the ASX.
How is it that parties with direct market access can run any piece of logic they like on the market? - Why is no code auditing done by ASIC or the ASX?
What can I do about this? - I want a level playing field. I suggest retail punters start to build a body of evidence where bot manipulation is spotted which can be submitted en-masse to ASIC when this comes to a head via a scam eventually being unmasked.
ASIC should remove DMA access from bot operators found to be running code to achieve a desired outcome as opposed to reacting to general liquid market conditions.
Restrictions should be placed on bot operators operating on illiquid stocks.
