day trader<\/a>. In that case, you might encounter such scams and succumb to them when you notice the high volume activity of certain stocks and purchase them, expecting the stocks\u2019 values to rise. <\/p>\n\n\n\nShareholders may be involved in various circumstances. They establish price thresholds at which they\u2019ll determine whether to stay involved in a firm or exit it, as well as the ones at which they\u2019ll determine whether to buy another share. As a result, losing an insignificant number of prominent shareholders could jeopardize the company\u2019s conditions. <\/p>\n\n\n\n
In the case of Initial Public Offerings (IPOs), circular trading might seriously affect the market. The hype and buzz surrounding IPOs are critical determinants of their success. Attempts to unlawfully manipulate that amount of excitement could result in a significant overvaluation of a company. Consequently, a company that seems to have a lot of potential gets more hyped than it should, and it finds itself with expectations and demands that it just can't meet, an initial investor then loses money when this happens, and the stock market\u2019s confidence as a whole is eroded.<\/p>\n\n\n\n
Aside from the large market implications, the implications for private investors are equally substantial. They may invest in a stock for more cash than it's worth. <\/p>\n\n\n\n
Mechanisms to Overcome Circular Trading<\/h2>\n\n\n\n
Since the advent of incidents in India in 2010, strategies for combating circular trading have been in development. The Securities and Exchange Board of India (SEBI) has started to use a variety of tactics to combat this illegal schema. This is accomplished by tightening stock market regulations to prevent high-volume stock trading in short time periods. A price band, for example, is a price range that is specified for a day, and a certain stock is only allowed to be traded during that day and within a specific range of price. <\/p>\n\n\n\n
They may, however, limit meaningful price swings in corporations when a significant event occurs. SEBI considers changing the price ranges based on market conditions to overcome such problems.<\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":510017,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_stopmodifiedupdate":false,"_modified_date":"","ub_ctt_via":"","_important_terms":"","inline_featured_image":false,"_uag_custom_page_level_css":"","advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"categories":[225],"tags":[],"table_tags":[],"featured_image_src":"https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading.jpg","author_info":{"display_name":"Ziga Breznik","author_link":"https:\/\/www.publicfinanceinternational.org\/authors\/"},"acf":[],"author_meta":{"display_name":"Ziga Breznik","author_link":"https:\/\/www.publicfinanceinternational.org\/authors\/"},"featured_img":"https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading-300x169.jpg","uagb_featured_image_src":{"full":["https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading.jpg",1600,900,false],"thumbnail":["https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading-150x150.jpg",150,150,true],"medium":["https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading-300x169.jpg",300,169,true],"medium_large":["https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading-768x432.jpg",768,432,true],"large":["https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading-1024x576.jpg",1024,576,true],"1536x1536":["https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading-1536x864.jpg",1536,864,true],"2048x2048":["https:\/\/www.publicfinanceinternational.org\/wp-content\/uploads\/circular-trading.jpg",1600,900,false]},"uagb_author_info":{"display_name":"Ziga Breznik","author_link":"https:\/\/www.publicfinanceinternational.org\/authors\/"},"uagb_comment_info":0,"uagb_excerpt":null,"coauthors":[],"tax_additional":{"categories":{"linked":["Knowledge Base<\/a>"],"unlinked":["Knowledge Base<\/span>"]}},"comment_count":"0","relative_dates":{"created":"Posted 1 year ago","modified":"Updated 1 year ago"},"absolute_dates":{"created":"Posted on October 10, 2022","modified":"Updated on January 9, 2023"},"absolute_dates_time":{"created":"Posted on October 10, 2022 9:27 am","modified":"Updated on January 9, 2023 10:38 am"},"featured_img_caption":"","series_order":"","_links":{"self":[{"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/posts\/510016"}],"collection":[{"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/comments?post=510016"}],"version-history":[{"count":3,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/posts\/510016\/revisions"}],"predecessor-version":[{"id":511393,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/posts\/510016\/revisions\/511393"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/media\/510017"}],"wp:attachment":[{"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/media?parent=510016"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/categories?post=510016"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/tags?post=510016"},{"taxonomy":"table_tags","embeddable":true,"href":"https:\/\/www.publicfinanceinternational.org\/wp-json\/wp\/v2\/table_tags?post=510016"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}