Wash Trade
In a wash trade (not to be confused with a wash sale ), an investor buys and sells a financial instrument at the same time . There can be several reasons for this:
- to artificially increase the trading volume so that the impression is created that this financial instrument is more desirable than it is actually the case;
- to artificially generate commission payments to brokers, e.g. B. to pay them for something that should not be made public. This happened, for example, within the Libor scandal ;
- for tax reasons.
Wash trades for market manipulation were forbidden in Germany until 2016 by Section 20a WpHG , since then they have been prohibited across the EU in accordance with Article 15 of the Market Abuse Regulation.