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Algorithms send thousands of orders and cancel them within fractions of a second. The flood can delay the exchange’s data feed, so rivals see stale prices while the sender, who knows its own orders, trades on faster information. It can also act as noise that masks a genuine strategy. Those who raise the concern cite bursts of messages with no trades behind them. Sceptics reply that heavy messaging is also normal for market makers, so intent is hard to prove. Exchanges respond with order-to-trade ratio charges, message limits and circuit breakers, and regulators in several places treat deliberate flooding as manipulation. Surveillance looks at message rates, cancellation ratios and delay effects across symbols. Exchanges weigh the harm of delayed data against the fact that heavy messaging also comes from honest market makers.

A surveillance team at an exchange sees one participant sending 200,000 orders in a few seconds in a single share, 99% of them cancelled, while data feed delays for other users spike. Soon after, the same participant executes a trade on another venue at an advantageous price. The exchange reviews the pattern, warns the member and refers the matter to the regulator.