Firstly, you need to understand couple of methods in which markets can be manipulated.
Spoofing & Layering
This is placing a large amount of buy or sell orders either at one price or at multiple prices (layering) to create an illusion of a sudden increase in demand (total bid volume) or supply (total ask volume). This sudden increase in bids/asks then gets other traders and the market to react preemptively which could get the scrip move in a particular direction. The only issue is that those orders that were placed were never meant to get executed. As soon as the market price gets close to the price at which these orders were placed, they will either be canceled or modified to a price further away. Hence spoofing the markets into believing that there is demand/supply and hence being able to maybe move the price of a security in a particular direction.
Quote stuffing
All exchanges have technical limitations in terms of how many orders the exchange matching engine can handle per second. When the number of orders are greater than this threshold, the exchange systems can slow down, not just for that one particular scrip but across the exchange. This slowing down could be for very small duration, just a few seconds to maybe even milliseconds. This slowing down will typically negatively affect high frequency traders doing arbitrage trades the most. Most of their strategies will lose money if they are slow.
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Both these methods aren’t just manipulative in nature but can stress the exchange infrastructure. By the way some blame quote stuffing as the reason for the the 2010 flash crash on the Dow Jones.
In India we have had monetary penalty to ensure unnecessary orders aren’t placed on the exchanges. Last year there was a circular put out which penalized if the order to trade ratio was more than 50, ~Rs0.02 per order. This penalty has now been made a lot more - exchanges disabling the account from trading itself. The circular also says that even if the order to trade ratio is lesser than 50 and if found that orders are being deliberately placed without an intention to trade, the penalty can be applicable.
How does it impact?
This is positive for the markets and retail traders. Order to trade ratio of 50 is quite high and will cover for most of the genuine cases. It will mostly only affect those who deliberately were placing orders to manipulate the markets. At Zerodha we have never had a customer reach a 50 order to trade ratio.