Core terms
Spoofing
Placing orders with the intent to cancel them before they execute, to mislead other traders about supply or demand. In US stocks it is pursued under anti-manipulation and anti-fraud rules rather than a statute named "spoofing".
The main bases for stocks are Securities Exchange Act Section 9(a)(2), Section 10(b) with SEC Rule 10b-5, and, for FINRA members, FINRA Rule 5210 Supplementary Material .03 on disruptive quoting and trading: a frequent pattern of orders on one side, a change in the market, trading on the other side, then cancelling the first orders (as of 2026-10-05). The word "spoofing" itself appears in Commodity Exchange Act Section 4c(a)(5)(C), which covers futures and other CFTC-regulated markets, not stocks.
Layering
Several orders at nearby prices placed and cancelled to create the same false picture. The SEC used the term in a 2017 equity case in the Southern District of New York.
Intent is not observable from Level 2. A large bid that vanishes as price approaches also fits a trader who changed their mind, an algorithm re-pricing, a market maker managing risk or an order moved to another venue. Enforcement cases rest on account-level order and trade records across venues.
What traders should verify
Plan for displayed size disappearing, with a stop that works on a thin book, rather than trying to identify a spoofer. Log "displayed size cancelled as price approached" as an observation without an intent label.
Do not conflate
Education about market rules, not legal advice. Cancelling orders is ordinary; "spoofer on the bid" in a chat room is a claim about intent that a retail screen cannot support, and the label tends to follow the outcome.
Primary source
Primary sourceFINRA Rule 5210, Supplementary Material .03