There is a much deeper question involved here.

If we want to protect people against each other actions, if we try to prevent every possible way of "manipulation", we end up at a regulated market. In fact, the traditional markets became more and more regulated exactly this way: Whenever someone got burned, he immediately starts yelling, asking the "authorities" to protect him against losses. But if the "authorities" then place taxes on the gains, everyone is pissed off.


That being said -- an order book just shows offers, not more. It is not binding.
Fake orders and real orders can be placed and pulled any time. This shows some current sentiment, not more, not less. But for a reliable judgement, you should look at the actual deals, and more importantly, you should look at the actual trading volume.


Others have already pointed out, that it can be convenient for a trader to have long term orders sitting there, and temporarily place short term orders closer to the spread. At times you'll even place several buy and sell orders at the same time.

Now the proposal is to prevent or limit this pattern. Personally I think this shows a questionable mindset: basically you assume that it is necessary to watch and guard people's actions. This is nannying.

If we we consider placing such fake walls harmful, the proper way of defence would be not to "regulate", but to make them expensive: simply deduce the trading fees from any order considered for execution, even if the order will be discarded due to lacking margin.