wash sale

Definitions

Banking

  • noun the sale and then repurchase of a block of shares similar to the British ‘bed-and-breakfast deal’. In the US it may also be used as a means of creating fictitious trading volume.

Forex

  • The act of entering into arranged transactions that appear to be actual buys and sells of an asset, but which do not affect a trader's net position. Wash sales are prohibited by the Commodity Exchange Act in the United States, although a wash sale might occur in the Interbank forex market as a favor extended by a market maker to a broker who is attempting to complete a deal where two counterparties cannot deal directly with each other due to credit line restrictions, but they can each deal with the market maker's bank.

Law

  • noun the activity of buying stock and selling it almost immediately, to give the impression that business is good
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