Trading Ahead

Trading Ahead

A New York Stock Exchange rule violation. Basically, in this situation the specialist puts their firm's interest ahead of the investor's interest. Consider an example. Suppose that the specialist simultaneously receives orders from two investors, one to sell 5,000 shares of XYZ and one to buy 5,000 shares of XYZ. Normally, these orders are matched. However, suppose that the specialist substitutes (matches) her own firm's 5,000 shares of XYZ. That is, the firm's own shares are sold instead of the order that came in previously. This disadvantages the buyer because the very next transaction will be the order to sell 5,000 shares of XYZ (which will likely put downward pressure on the price). Notice that the firm has bailed out of XYZ at a higher price than if the order was reversed (the specialist's firm selling afterwards). Trading ahead is part of what is known as negative obligation. Trading ahead should not be confused with front_running.

Trading Ahead

A trade in which a specialist, one who trades only to maintain liquidity in the market, makes a trade when there is an offsetting trade from someone else. For example, suppose a specialist receives an order to buy 100 shares of a stock. Ordinarily, the specialist would look for an offsetting order from the public and only sell the shares from its own account if no such order exists. The specialist trades ahead when it sells 100 shares to the buyer when another order is on record. The specialist does this in order to make a profit for itself. Trading ahead is a violation of NYSE and other rules. See also: Front running.
References in periodicals archive ?
It has now smartened up 69 out of 128 shops and its new-look outlets are trading ahead of the rest.
AWSR) common stock, including trading ahead of customers' orders, recordkeeping violations, violating just and equitable principles of trade, and for providing false testimony.
In early trade, stocks moved in a narrow range as investors refrained from active trading ahead of the weekend, brokers said.
COMPUTER chip recycling company Pure Wafer expects to report strong trading ahead of current market expectations when it releases its preliminary results for the year to the end of June on October 1.
The Board is pleased to report that the positive momentum generated during an encouraging first half performance has continued into the second half of 2012, with the Company trading ahead of management's expectations.
Chief executive David Atkins said: "Our regionally dominant shopping centres and convenient retail parks are trading ahead of national benchmarks and continue to attract successful retailers.
SCOTTISH online dating agency Cupid are trading ahead of expectations with monthly revenues now topping pounds 4million.
Shares in Sainsbury's were up on the FTSE 100 in afternoon trading ahead of the supermarket chain's preliminary results, expected tomorrow.
6% rise in half-year profits today and predicted stable trading ahead.
THE new owner of the Halifax estate agency business says it is trading ahead of expectations after half-year turnover surged by 21%.
In the commercial property division, more than 147,000 sq ft of space has been let, while construction interests are trading ahead of expectations with an order book worth pounds 600m.