Oslo Stock Exchange Comments On Market Manipulation

There’s an old saying: “Forever owned is only a bad reputation.” Unfortunately the Oslo Stock Exchange has one, and have been trying to correct for years. However, the OSE statistics shows that the old saying might be true, as the number of reported cases of market manipulation and illegal insider trading seem to remain stable.

“We have no reason to suspect that there is price manipulation in a “tip of an iceberg” scale at the Oslo Stock Exchange.”

Guro Steine

Oslo Stock Exchange

The Oslo Stock Exchange’s label as an “insiders market” goes back many years to the time when computers and robots only was seen in Hollywood movies, and the main players in the Norwegian stock market could be counted on your fingers. The OSE has put substantial effort into getting rid of this rather unflattering image. However, the number of reported suspicions of illegal insider trading per year is the same today as it was five years ago.

Foreign investors have also been wary of the fact that the Norwegian government owns about one third of the total value of companies listed at the exchange, and for many years they added a  so-called “state-discount” when trading in Norway.

Bente Landsnes


According to managing director Bente Landsnes, the “state-discount” is gone, but several foreign investors I’ve been talking to over the last couple of years are still concerned about the few dominating institutional players operating the exchange.


If their concerns are justified, I really can’t say.

However, the statistics for reported incidents of suspected illegal insider trading and market manipulation seems quite stable – except for a peak in 2007.

Here’s the figures for the last five years:


Reported insider trading: 27

Reported market manipulations: 17


Reported insider trading: 24

Reported market manipulations: 15


Reported insider trading: 40

Reported market manipulations: 9


Reported insider trading: 23

Reported market manipulations: 14


Reported insider trading: 28

Reported market manipulations: 16

2010. (Q2).

Reported insider trading: 12

Reported market manipulations: 3


Time Are A Changing

Yesterday’s startling news about the two day traders who managed to figure out the pattern of one of the worlds largest computer trading systems, made a couple of hundred thousand kroner by raising or lowering the bid/ask price in a few extremely low liquid shares,  just like the big institutional high frequency traders does, and now risk up to six years in prison, raised anger amongst Norwegian private investors.

As one said: “How the hell can we earn money intraday if we are not smarter than then those f***ing robots? They’re everywhere!”

See: Update: Day Traders Crack The Timber Hill Trading System

Can’t Blame The Robots

“We can’t comment on a matter which is now handled by police, but we can say something general about market manipulation,” communication manager Guro Steine says in a email to the Econotwist’s Blog:

Guro Steine

“New and faster computer systems allow for increased use of technology in the securities trade. This happens now in all modern market places and exchanges in the world. It also results in different trading patterns, which immediately may seem strange to us. We who are engaged in market places use a lot of time and effort to understand this even better than we do today. We understand that it is frustrating for such a day trader to “compete” with lightning-fast computers and sophisticated algorithms. We humans are struggling to keep up with mocrochips. However, we believe it is too easy to draw the conclusion that the market participants involved in the algorithm based commerce are thugs, or that they engaged in price manipulation, just because they act differently than we have been accustomed to,” she writes.

Adding: “Oslo Børs monitors all stock trade and has on several occasions observed behavior among market participants that there is reason to investigate further.”

Question: Is this a unique case, or is it possible we’re seeing the tip of the iceberg?

“If an investor intends to manipulate the price of a share, he will always look for new ways to do it. That sets the price manipulation cases always differ in terms of procedure and there are hard to categorize something more “unique” than anything else. We have no reason to suspect that there is price manipulation in the “iceberg” scope on the Oslo Stock Exchange, partly because the Oslo Stock Exchange using substantial resources to monitoring and because some attempts will be detected. Oslo Stock Exchange reported 12-15 suspicion of price manipulation to the Finance Authority annually and in any of this matter is also being brought charges.”

(Read more about market surveillance on the Oslo Stock Exchange here: http://www.oslobors.no/Oslo-Boers/Handel/Markedsovervaaking)

Question: What can be done to make the electronic marketplaces safe against this type of fraud?

“The provisions concerning market manipulation are clear and they will apply regardless of whether it is a person or machine that breaks the rules. We also have examples of cases where brokers have been sanctioned because they have set up algorithms that do not work properly, and acting on unwanted manner in the market,” Guro Steine responds.

She refers to the Norwegian Securities Trading Act:

§ 3-8. Market manipulation

(1) No person may conduct market manipulation in relation to financial instruments.

(2) market manipulation means:

1.transactions and trade order which gives or is likely to give false, incorrect or misleading signals about supply, demand or price of financial instruments, or to ensure that the price of one or more financial instruments is at an abnormal or artificial level, unless the person or those persons who have entered into transactions or trade orders filed, proves that the rationale is to be regarded as legitimate and that the transaction or trade order is consistent with the behavior of Finance Authority has accepted that market practice in the relevant market, or

2. transactions entered into or trade orders must be filed in connection with any form of deceptive conduct, or

3. dissemination of information through the media, including via the Internet, or by any other method, when the information gives or is likely to give false, incorrect or misleading signals about financial instruments, including dissemination of rumors and news, when the person who has spread the information knew or should have known that the information was false, incorrect or misleading. When a journalist in his professional activity disseminate such information, the ratio of assessed having regard to the rules that apply to their profession, unless the person directly or indirectly to obtain benefits or profits from the distribution.


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Filed under International Econnomic Politics, National Economic Politics

3 responses to “Oslo Stock Exchange Comments On Market Manipulation

  1. Pingback: Espen G. Haug: Algorithms Should Be Monitored On A Daily Basis « The Swapper

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