Circular Trading


DEFINITION of 'Circular Trading'

A fraudulent trading scheme where sell orders are entered by a broker who knows that offsetting buy orders, the same number of shares at the same time and at the same price, either have been or will be entered.

BREAKING DOWN 'Circular Trading'

These trades do not represent a real change in the beneficial ownership of the security.

  1. Guilt-Edged Investment

    An unethical investment that generates profits for the investor. ...
  2. Jitney

    A situation in which one broker who has direct access to a ...
  3. Front Running

    The unethical practice of a broker trading an equity based on ...
  4. Churning

    Excessive trading by a broker in a client's account largely to ...
  5. Cross Trade

    A practice where buy and sell orders for the same stock are offset ...
  6. Interpositioning

    The unlawful practice of adding an extra broker/dealer as a principal ...
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