UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

The regulation of trade-based manipulation Menun, Marie R.


We examine a model in which security price manipulation can lead to the inefficient allocation of resources. The actions of a manipulator can create excess noise in the market which may discourage some investors from participating. We show how a regulator can use trading halts to mitigate the negative impact of manipulation and induce investors back into the market. However, the benefits derived from using halts are somewhat offset by illiquidity costs imposed by the halts on some market participants. Thus, a regulator who must contend with a manipulator is faced with a trade-off between improving allocative efficiency and limiting costs associated with reduced liquidity. Our model demonstrates this trade-off and outlines possible equilibria.

Item Media

Item Citations and Data


For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use.