What is buy, advertise, sell?

According to MAR's Commission Delegated Regulation (EU) 2016/522 of 17/Dec/2015, buy, advertise, sell (or as MAR calls it: “opening a position and closing it immediately after its public disclosure”) consists in opening a large position, announcing it as it was a long-term investment, and then closing right afterwards.

MAR does not mention it, but I guess that Sell, Advertise, Buy is also market manipulation.


Who can buy, advertise and sell?

• A famous/reputable investor who is followed by other investors; or
• A person/entity capable of buying [selling] positions that are large enough that they are announced either due to regulatory requirements or just because the financial media finds it to be relevant.

Which market conditions?

I guess that the market needs to be somewhat liquid – as the manipulator needs the security’s price to react to the news flow (and illiquid securities sometimes do not).

Buy, advertise and sell vs. pump and dump

In my view, buy, advertise and sell is basically a specific form of pump and dump. Indeed, here the manipulator also builds up a position, also disseminates a misleading information (as the manipulator lies about his/her intention to hold the position for a long time), and then sells the position at a higher price.

Example 1

A manipulator:

• Builds up a large position in a security;
• Announces the investment and says that it is a long-term decision, leading other investors to invest and therefore driving the security’s price up;
• Sells the position at a higher price.

Example 2

A manipulator:

• Sells a large position in a security;
• Announces the disinvestment and says that it is a long-term decision, leading other investors to disinvest and therefore driving the security’s price down;
• Re-buys the position at a lower price.