Commenting on the fines for Dutch traders using layering, Matt Smith CEO of SteelEye said:
“Layering is a market manipulation tactic used by traders to create a false impression of market liquidity by placing multiple orders at defined price levels (layers). The trader doesn't intend to execute the orders and will be cancel them once the price has moved to a favourable place and a real order has been placed on the opposite side to take advantage of the favourable price movement.”
“Layering can be very distinctive within a trader’s overall activity pattern and therefore relatively easy to spot given the right technology and data. Trade surveillance technology should be able to flag someone placing orders, cancelling them, and then placing new orders in the opposite direction. This specific action by the French regulator is synonymous with a broader move across Europe which puts an emphasis on trade surveillance over communications surveillance.”