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 ?
Treasury Market Outlook: bond yields have cheapened slightly, while equities are mildly firmer in cautious trading ahead of the U.S.
The local stock barometer yesterday ended slightly higher in muted trading ahead of the Christmas holiday break.
RETAIL giant Next has warned over "extremely volatile" trading ahead of the crucial Christmas season as online sales continue to offset tough conditions on the high street.
LONDON, Dhu-AlHijjah 24, 1436, October 08, 2015, SPA -- Britain's blue-chip FTSE 100 pared some of the previous session's strong gains on Thursday in cautious trading ahead of an interest rate decision from the Bank of England and the index looked set to snap a week-long rally, Reuters reported.
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.
Among recent enforcement actions by the SEC were charges against two ex-Wells Fargo employees--an analyst and a trader--for insider trading ahead of ratings changes and against two individuals for insider trading ahead of a hedge fund manager's announcement about Herbalife.
Like-for-like sales in the 10 weeks to June 14 have been in line with expectations, with online trading ahead of market growth forecasts.
In early trade, stocks moved in a narrow range as investors refrained from active trading ahead of the weekend, brokers said.
However, there was no evidence that any employees leaked news of the downgrade or engaged in any suspicious trading ahead of it, the report said.
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.