Market Cornering

Market Cornering is an illicit or aggressive trading strategy where a participant or group accumulates enough of an asset or derivative position to control the supply or demand. By effectively removing the asset from the available float or controlling the majority of open interest, the cornerer can dictate the settlement price to their advantage.

This forces other participants who are short the asset to buy it at inflated prices, leading to a short squeeze. In the context of derivatives, this involves manipulating the delivery or settlement mechanism of the contract.

Exchanges use surveillance tools to detect such behavior and intervene before the corner disrupts the market's integrity. It is considered a form of market abuse that undermines fair price discovery and erodes trust in the financial ecosystem.

Preventing this is a primary goal of exposure limits and trade monitoring.