Defining the gray areas of prearranged trading

January 1989

Front-runners beware;
NYSE, CME clamping down

And not every one is pleased with the narrower scope of the NYSE's current proposal. Robert Kanter, managing partner of ARBCO Limited Partnership, a New York-based trading firm, says the NYSE's proposal "addresses only a very small aspect of the front-running practices and almost justifies the remaining ones."

Those remaining forms of front-running not explicitly prohibited in the proposal include prepositioning a trade in the derivative market with the knowledge of an order to be executed at a future time and the practice of tipping or giving material market information to customers. While the proposal prohibits "manipulative" self front-running, he says it does not define what would constitute manipulation.

Still, Kanter says, front-running at least is being addressed.

June 1989 FUTURES

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