Market Manipulation Risks in Contracts for Difference (CFDs): Legal regulation and the Jordanian framework

Abstract

Market manipulation represents one of the most serious threats to the integrity and efficiency of securities markets. By creating false or misleading impressions regarding the supply, demand, or price of financial instruments, manipulative practices distort price discovery, weaken investor confidence, and expose market participants—particularly retail investors—to significant losses. This paper examines the concept of market manipulation within the context of capital market transactions and assesses the legal protection mechanisms available to combat such conduct under Jordanian law. Adopting a doctrinal legal methodology, the study analyses the relevant statutory provisions governing securities trading, market conduct, and investor protection, with particular attention to the role of regulatory oversight and enforcement. The paper argues that effective prevention of manipulation requires not only criminalisation and civil liability rules, but also robust supervisory powers, early detection tools, and coordinated administrative enforcement. It further highlights key legal and practical challenges that may limit the deterrent effect of existing regulations, including evidentiary complexity, the speed of speculative trading practices, and the evolving nature of manipulative strategies. The study concludes with recommendations aimed at strengthening the Jordanian legal framework and enhancing regulatory capacity to ensure fair trading and maintain market confidence.