What Is Front-running?
Trading ahead of a customer's order based on knowledge of that pending order to profit at the customer's expense. This violates state securities laws and fiduciary duties, and must be prohibited through firm supervisory procedures.
Front-running across 2 exams
Front-running appears on the following exams. Each defines it in the context candidates are tested on:
- Series 63
- Trading ahead of a customer's order based on knowledge of that pending order to profit at the customer's expense. This violates state securities laws and fiduciary duties, and must be prohibited through firm supervisory procedures.
- Series 66
- A prohibited practice where a trader executes trades on personal account ahead of client orders to benefit from anticipated price movement; a violation of fiduciary duty and securities law. The Series 66 requires candidates to identify front-running as unethical and understand its consequences.