Twinkle Jaiswal, Amity Law School, Lucknow
Introduction
The term Circular Trading is related to share markets. Circulating trading involves the members of an exchange for a cartel and trade among themselves in order to create huge false volumes and rigging the price of the shares and thus misleading the common investors into a trap. This refers to a fraudulent trading scheme where a broker or trader or another person’s in collusion with each other enters into sell order exactly offsetting the buy orders since they have prior information. The persons buying or selling know the same number of shares at the same time and for the same price will be entered to neutralize the transaction. This is done to operate the price of the underlying assets by increasing the volume of trade. They are aware of the exact number of shares at the exact time for the exact price that should be entered to neutralize or offset the deal. This discourages competition and there is no change in the beneficial ownership of the security.
