Wash trading and jitney What is wash trading?
Wash trading is a process whereby a trader buys and sells a security for the express purpose of feeding misleading information to the market. In some situations, wash trades are executed by a trader and a broker who are colluding with each other, and other times wash trades are executed by investors acting as both the buyer and the seller of the security.
Wash trading misleads investors into believing that trading volumes for a security are higher than they actually are, potentially increasing legitimate trading activity on the security in the process.
What Is a Jitney?
In finance, the term jitney refers to a broker that does not have direct access to an exchange and therefore relies on another broker with exchange access in order to execute their trades.
The term can also be used to refer to a type of market manipulation in which brokers trade securities back and forth with one-another in order to earn commissions and artificially produce the appearance of high trading volume.