The "duty" part is why this definition doesn't apply well to this case. Arbitrageurs here are working with the same public information of all other participant

The "duty" part is why this definition doesn't apply well to this case. Arbitrageurs here are working with the same public information of all other participants, and have accepted no obligations towards the folks whose orders are informing them. Although this is clearly a structural issue with the exchanges that participants should be aware of, the term "malfeasance" is being thrown around a bit loosely in the paper.