How Traders Use Front-Running to Profit From Client Orders
ByAbout $5.3 trillion changes hands daily in the foreign exchange market. When banks make trades in currencies on behalf of customers, similar to when they trade other securities like stocks or bonds, they are supposed to put the client’s interests ahead of their own. But that’s not how it always works out. In a case announced on Wednesday, prosecutors say two HSBC employees used information they had gotten about a pending client transaction to trade ahead of it, turning a profit for the bank in the process.
This is called “front running,” a practice in which a trader places orders on a security for the firm’s own account, taking advantage of advance knowledge of orders coming from its customers…
How Traders Use Front-Running to Profit From Client Orders
