What Is Market Integrity?
Market integrity refers to a condition where trading activities take place in a fair and transparent manner, reflecting actual market dynamics. In a market that possesses integrity, price discovery and trading volume occur through fair market mechanisms, ensuring that all market participants have an equal opportunity to transact.
Consequently, trade organizers generally implement various policies, surveillance mechanisms, and controls to help maintain trade fairness and minimize practices that can mislead the market.
Practices That Disrupt Market Integrity
In crypto asset trading, there are several practices generally categorized as market abuse, including:
Wash trading: Creating artificial trading activity or volume to give a false impression that does not reflect actual market conditions.
Pump and dump: Artificially inflating the price of an asset, followed by selling it to gain a profit.
Insider trading: Executing transactions by exploiting material, non-public information.
Spoofing or layering: Placing orders that are not genuinely intended to be executed, with the purpose of manipulating market perception.
Front-running: Executing transactions ahead of others by taking advantage of advance knowledge concerning pending orders from other parties.
These practices have the potential to compromise trading fairness, reduce market transparency, and erode the trust of market participants.
INDODAX's Commitment to Maintaining Market Integrity
As a crypto asset trade organizer, INDODAX is committed to supporting the creation of healthy, fair, and transparent trading environments. This commitment is realized through the implementation of General Terms and Conditions that strictly prohibit various forms of market abuse, backed by surveillance and control mechanisms that continue to be developed alongside market and technological advancements.
One form of practice that can lead to wash trading is a self-trade, a condition where buy and sell orders from the same account match each other, thereby creating trading activity that does not reflect an actual transfer of asset ownership.
To help prevent this condition, INDODAX implements Self-Trade Prevention (STP), a feature that automatically detects whether buy and sell orders from the same account have the potential to match each other in the order book. If such a condition is detected, the system will cancel one of the orders according to the applicable configuration before the transaction is executed.
The implementation of STP is a form of preventive control that complements INDODAX's efforts to maintain trading fairness and support market integrity.