Which practice involves buying or selling securities to keep prices at a specific level?

Which practice involves buying or selling securities to keep prices at a specific level?

• A. Parking
• B. Marking the close
• C. Spoofing/layering
• D. Capping/pegging

Answer: (D)

Keeping a security’s price at a specific level by actively buying or selling to counter movement is pegging (often described as capping). The idea is to anchor the price around a target by stepping in with trades whenever it drifts away: if the price threatens to rise above the level, purchases are made or selling pressure is introduced to push it back down; if it falls, selling pressure is reduced and buying is used to push it back up. By continually providing demand or supply at the target price, the price remains near that level. This is the concept behind why it’s described as capping/pegging. Other options refer to different manipulation techniques—placing fake orders to mislead, influencing a close, or other tactics—not to maintaining a price at a set level.

Keeping a security’s price at a specific level by actively buying or selling to counter movement is pegging (often described as capping). The idea is to anchor the price around a target by stepping in with trades whenever it drifts away: if the price threatens to rise above the level, purchases are made or selling pressure is introduced to push it back down; if it falls, selling pressure is reduced and buying is used to push it back up. By continually providing demand or supply at the target price, the price remains near that level. This is the concept behind why it’s described as capping/pegging. Other options refer to different manipulation techniques—placing fake orders to mislead, influencing a close, or other tactics—not to maintaining a price at a set level.