Circular Trading

Circular Trading is a fraudulent activity in the stock market in which two brokers or market players trade a stock back and forth to give the impression of huge trading volume. It is a method whereby a buyer and a seller of shares/stocks come to an understanding; both sell order and buy order will be matched with the price as well as the quantity, creating large volumes in the trading of specific scrips. It pushes the share price upwards and the brokers take undue advantage from the rise in share prices. It is illegal as it does not allow competition and does not result in a change of beneficial ownership.

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