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Defining the gray areas of prearranged trading
January 1989
FUTURES
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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