The starting point for considering whether you are engaged in market manipulation is to consider the drivers behind the trade or activity.
If the trading activity has a legitimate commercial and economic rationale to it, it is unlikely to be considered market manipulation and therefore will be legal.
However, if the behaviour is driven by a desire to mislead the market or distort prices, this would be illegal.
It is also important to consider the broader external environment when determining what is acceptable.
A useful test is to consider how you would explain the activity to a regulator. Do you think they would see the motivation as legitimate?
Let’s now consider some scenarios.