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The practice in which a broker conducts a transaction on his/her own account after filling a similar order on behalf of a client. For example, if a client sells 10,000 shares and the broker owns some shares in the same company, he may piggyback by selling his own shares. A broker piggybacks when he/she believes that the client has insider information, or at least a better understanding than the broker on the market's future movements. Piggybacking should not be confused with piggy back registration, which is a different concept altogether.


1. A broker trading in his or her personal account after trading in the same security for a customer. The broker may believe the customer has access to privileged information that will cause the transaction to be profitable.


A broker who piggybacks acts illegally by buying or selling a security for his or her own account after -- and presumably because -- a client has authorized that same transaction.

One speculation is that a broker in this situation thinks the client is acting on information that the broker doesn't have.

References in periodicals archive ?
In his recent paper, "The Hidden Risks of Piggyback Lending," economist Charles Calhoun, an independent consultant and researcher based in Washington, D.
While piggyback and other innovative loan products have facilitated high rates of house-price appreciation, they have also increased exposure to the risks of declining housing values.
Figure 3 Comparison of Interest-Only (IO), Piggyback and 30-Year Fixed- Rate Mortgage (FRM) (Purchase Price: $250,000; Down Payment: 10%; Loan Amount: $225,000) Interest- Piggyback (2) 30-Year Only (1) 3/1 FRM (3) Monthly Payment -- Year 1 $1,054 $1,168 $1,375 Monthly Payment -- Year 4 $1,054 $1,445 $1,278 Monthly Payment -- Year 6 $1,909 $1,656 $1,278 Change Since Year 1 +81% +42% -7% Balance Paid at End of Year 5 $0 $15,034 $16,964 Notes: 1 based on 5.
But the whole act of whether you piggyback questions on a marketing research poll is more of a business or ethical issue -- not a matter that affects the results.