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Market Abuse Traditional Finance

Marking the Close

Trading at or near the close to push the official closing or settlement price to an artificial level.

1 Introduction

Marking the close, also called "banging the close", is the practice of trading aggressively at or near the closing auction or settlement window to push the official closing or settlement price to an artificial level. The closing price is not just a number on a screen: it feeds fund net asset values, the settlement of options and futures, index calculations and benchmark marks. By spending a relatively small amount in the final minutes, a manipulator can move a reference price that values a far larger position. Marking the close is treated as market abuse under the EU Market Abuse Regulation (MAR) and is pursued as manipulation by regulators such as the SEC, CFTC and FCA.

Final minutes

Window targeted around the close

Reference price

Sets NAVs, settlements and index levels

MAR / MAD

Prohibited as market manipulation

2 Interactive Closing Price Manipulation

Phase: Normal Session

Intraday Price vs VWAP

Closing Mark vs Fair Value

Step 1 - Normal Session: Through the trading day the price drifts gently around a fair value near $50. Volume is ordinary and the developing VWAP (volume weighted average price) tracks close to the last traded price.

3 Detailed Analysis

Why the Close Is Targeted

The Mechanism

A burst of aggressive orders in the closing auction or final minutes moves the official close. Because the close sets reference prices, a small trading cost can shift the value of a much larger position held elsewhere.

Marking vs Legitimate Closing Activity

Genuine index funds and hedgers also trade at the close, but for execution at the settlement price. Marking the close differs in intent: the goal is to distort that price, not to obtain it, which is what makes it abusive.

Detection Methodology

Surveillance teams compare the closing or settlement print against the day VWAP and the prevailing price just before the close, then ask whether one participant drove the move. They look for a small number of aggressive prints concentrated in the last minutes, a position elsewhere (options expiry, a fund NAV, an index rebalance, or a benchmarked portfolio) that benefits from the moved level, and a sharp reversion when trading resumes. Cross-product links, where the closing trade is small but the re-valued exposure is large, and repeated patterns around expiry or month-end pricing dates, strengthen a case.

Red Flags

  • Aggressive buying or selling concentrated in the closing auction or final minutes of trading
  • A closing or settlement price that diverges sharply from the day VWAP and from the pre-close level
  • The trader holds an off-market position (options, NAV, index, benchmark) that gains from the moved close
  • Price reverts toward fair value the next session, with the pattern recurring around expiry or pricing dates

Related Fraud Types

Benchmark Manipulation

Submitting false inputs or trading around fixing windows to distort a reference rate such as LIBOR or a daily FX fix.

Market Manipulation

Artificially inflating or deflating the price of a security or otherwise influencing market behavior for personal gain.

Wash Trading

Simultaneously buying and selling the same asset to generate misleading activity and inflate trading volume.