[gruez]

If we use that expansive definition of "front running", is it "front running" if I buy stocks trying to squeeze short sellers? What about if I thought people would buy/sell telsa stocks because of musk's role in the culture wars, and tried to get ahead of that? Is "front running" just buying low and selling high?

[toast0]

Well, let's not call a short squeeze by another name.

Otherwise, I wouldn't call those things front running, as there's no indication of imminent activity.

If a material increase in lending rates on a heavily shorted stock was announced, and you bought because you were pretty sure the shorts would be buying to close, that could be front running, yeah.

I dunno about market moves based on Elon's role in the culture wars, but maybe if he did something in particular.

In general, buy on the rumor, sell on the news could qualify as front running under this definition, but I think I'd want to narrow it a bit to working to trade ahead of perceived imminent and definite trades. Most of the illegal front running is trading ahead of specific trades in response to seeing those orders.

[gruez]

>Most of the illegal front running is trading ahead of specific trades in response to seeing those orders.

Any evidence this is actually happening, rather than something like "this ETF rebalances every quarter, they're unbalanced, and are expected to rebalance in this way", or "this company is probably going to get included in the S&P 500 because it's doing really well"? What makes this sort of "front running" less acceptable than buying because "I like the stock", or trading on technical analysis?

[toast0]

Here's three SEC press releases that seem to indicate there's evidence of illegal front running:

https://www.sec.gov/newsroom/press-releases/2021-118

https://www.sec.gov/newsroom/press-releases/2021-186

https://www.sec.gov/newsroom/press-releases/2022-228

Trading ahead of index funds when an index change is announced is front running in my book, but it isn't illegal front running; but I don't consider it less acceptable than buying because the graph makes a funny shape.

[gruez]

All 3 examples you provided are for people trading on material nonpublic information. In other words, some guy working at an asset manger knew they were going to execute trades on behalf of a client, and then made his own trade ahead of that. That's textbook front running, no denying it, but that's not anywhere close to what's happening with "ETF rebalancing" or PFOF. It's perfectly legal, for instance to speculate on whether TSLA or whatever is going to make it into the S&P 500 and "front run" that. It's also not clear why such trades would be immoral or unfair.

>https://www.sec.gov/newsroom/press-releases/2021-118

>Wygovsky repeatedly traded in his family members’ accounts held at brokerage firms in the United States ahead of large trades that were executed on the same days in the accounts of his employer’s advisory clients.

>https://www.sec.gov/newsroom/press-releases/2021-186

>Polevikov had access to real-time, non-public information about the size and timing of his employers' securities orders and trades, and used that information to secretly trade on, and ahead of, his employers' trades.

>https://www.sec.gov/newsroom/press-releases/2022-228

>Billimek would inform Williams of the asset management firm’s market-moving trades prior to their execution

[toast0]

> but that's not anywhere close to what's happening with "ETF rebalancing" or PFOF. It's perfectly legal, for instance to speculate on whether TSLA or whatever is going to make it into the S&P 500 and "front run" that. It's also not clear why such trades would be immoral or unfair.

I never said trading a stock ahead of it being added or removed to the S&P 500, or between the announcement of it being added or removed and index funds actually purchasing it is illegal, immoral, or unfair, or less acceptable than any other trade.

Just that it's front running. And then you asked if there were examples of illegal front running, so I provided those --- which aren't examples of trading ahead of index funds, because trading ahead of index funds isn't illegal.

I'm not really sure what you're asking at this point.