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by pgwhalen
2010 days ago
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> the reality is that front running is not a technical term, neither in law nor in any academic or formal financial treatment. There is literally a FINRA rule with with front running in the name (5270). It doesn't have to be a technical term for it to still have meaning (outside of Michael Lewis's intent to change its meaning). It specifically refers to a broker trading based on the knowledge of their client's intent to trade. The examples you give actually are instances of the true definition. It doesn't really happen in equities because of how automated and smooth that market is, but it certainly happens in other areas of finance. The principal agent problem is much more general. |
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