Anavex Life Sciences Corp (AVXL)

[bas2020]

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What does 'Wash Trading' mean

Wash trading refers to buying shares through one broker and selling the shares through another broker. Wash trading is not legal, as it is performed to manipulate the market and encourage other investors to move into a buying position. A quick turnaround of positions is not considered wash trading, provided the transaction creates market risk for the trader and alters his market position.


BREAKING DOWN 'Wash Trading'

Also known as round trip trading, the act of wash trading allows traders to buy stocks and then sell them, giving the appearance of purchases and sales being made, but the trader does not incur any market risk or change in market position.

The Commodity Exchange Act

The Commodity Exchange Act (CEA) establishes regulations for the trading of commodity futures in the United States. Under the CEA, wash trading is illegal. The CEA was passed in 1936 and has been amended a number of times since its establishment. It replaced the Grain Futures Act of 1922. This Act provides the statutory framework under which the Commodity Futures Trading Commission (CFTC) operates. The CFTC was created in 1974 as a result of the CEA.