Spoofing in Finance: Impact, Crackdowns & 2025 Australian Market Insights

Spoofing might sound like a prank, but in the world of finance, it’s a serious threat to market fairness and investor confidence. In 2025, the Australian Securities and Investments Commission (ASIC) has put spoofing under the spotlight, and for good reason—this deceptive trading practice can move markets, distort prices, and leave everyday investors exposed to risks they never signed up for.

What is Spoofing and Why Does It Matter?

Spoofing is a form of market manipulation where traders place large orders to buy or sell a security with no intention of executing them. The goal? To create a false impression of demand or supply, tricking other market participants into reacting. Once the market moves in the desired direction, the spoofer cancels those fake orders and capitalises on the price movement with real trades.

For example: A trader might place a massive buy order for BHP shares at a price just below the current market level, making it appear there’s strong demand. Other investors, seeing this, may rush to buy—pushing the price up. The spoofer then cancels their order and sells at the new, higher price.

• Artificial volatility: Spoofing can trigger sudden price swings, making markets less predictable.
• Loss of trust: When investors realise markets are being manipulated, confidence erodes.
• Regulatory focus: In Australia, spoofing is illegal under the Corporations Act, but enforcement and detection remain ongoing challenges.

2025: Regulatory Crackdown & Technology to the Rescue

This year, ASIC has stepped up surveillance, leveraging AI-driven analytics to detect suspicious trading patterns in real-time. Several high-profile investigations have already made waves on the ASX and Chi-X platforms, with hefty penalties and even criminal charges for those caught manipulating orders.

• March 2025: A Melbourne-based proprietary trading firm was fined $2.5 million after ASIC found evidence of coordinated spoofing in small-cap mining stocks.
• Regulatory guidance: ASIC’s updated Market Integrity Rules (effective January 2025) specifically name spoofing and layering, clarifying that even attempted spoofing can trigger enforcement action.
• Global cooperation: Australian regulators are now collaborating with overseas counterparts, sharing intelligence on cross-border spoofing rings that operate on multiple exchanges.

Tech is also part of the solution. Exchanges are investing in machine learning tools to identify order book anomalies—like sudden floods of orders that disappear before execution—allowing for quicker intervention and investigation.

How to Spot and Protect Yourself from Spoofing

For retail investors, spoofing is notoriously hard to spot. But there are some red flags and strategies to help you stay one step ahead:

• Order book oddities: Watch for large orders that pop up and vanish within seconds, especially if they never get filled.
• Unusual price swings: If a stock is swinging wildly on no news, check the market depth for suspicious activity.
• Stick to fundamentals: Don’t let sudden order book moves sway your investment decisions. Focus on company performance and long-term trends, not short-term hype.
• Use limit orders: When buying or selling, consider using limit orders to control your price exposure, rather than chasing the market.

In 2025, several online brokerages have introduced investor education modules and real-time alerts for suspicious trading activity, helping level the playing field for everyday Aussies.

The Future: Spoofing, Markets, and the Path Forward

Spoofing isn’t new, but the tools to fight it are evolving fast. With ASIC’s renewed focus, sharper surveillance, and more severe penalties, the message is clear: market manipulation won’t be tolerated. For investors, staying informed and wary of too-good-to-be-true market moves is essential.

As Australia’s markets become more sophisticated, the hope is that transparency and trust will grow, giving every investor—from the seasoned trader to the first-time punter—a fair go.