Front running
The front running is a anglicism which the trading of confidential exploiting knowledge about the trading strategy of the client (before the implementation of in order given securities order designated) by the representative of the executive institution for its own benefit.
For example, a large buy order in tight markets leads to a disproportionate increase in the price of the value concerned. With this knowledge, a stockbroker can first buy values for the proprietary trading account before such a large purchase order in order to benefit from the price increase of the subsequent order (and thus already increases the price to the detriment of the client). If the private contract is placed at the same time, one speaks of the special case of parallel running .
If you use front running in connection with time differences of fractions of a millisecond, e.g. B. by placing commercial computers very close to the stock exchange calculators or other technical interventions, one speaks of high-frequency trading , a process that caused a broad discussion in the international public through a book by Michael Lewis published in 2014 .
Legal assessment
Front running is an illegal trade practice in most countries.
In Germany it constitutes a violation of the conduct of business obligations of Section 63 (2) WpHG (“Avoidance of Conflicts of Interest ”) and, according to Section 120 (8) No. 27 in conjunction with Section 20 WpHG, can result in a fine of up to 5 million Euros or 10 percent of the company's total turnover. In the regulation revised in 2004, it was clarified that the execution of own orders using the knowledge of already issued customer orders (i.e. front running) is the exploitation of inside information and is consequently one of the criminal insider transactions according to §§ 12 to 14 WpHG old version. The relevant regulations have been based on the Market Abuse Regulation since 2016 .
In Switzerland, front running violates the requirements set out in Art. 11 Para. 1 lit. c Securities dealer's fiduciary duty set out in the Stock Exchange Act . The prohibition of front running is explicitly anchored in Art. 12 of the Code of Conduct for Securities Dealers of the Swiss Bankers Association 2008 (soft law).
Other forms of stock market manipulation
literature
- Michael Lewis: Flash Boys: Revolt on Wall Street . Campus-Verlag, Frankfurt am Main; New York 2014, ISBN 978-3-593-50123-9 (American English: Flash Boys (A Wall Street Revolt) . 2014. Translated by Neubauer, Jürgen).
- John Lanchester: The super click. How high frequency trading works. In: Le Monde diplomatique . Berlin, July 2014, pp. 1, 10f.
- Peter Kovac: Flash Boys: Not So Fast: An Insider's Perspective on High-Frequency Trading . Directissima Press, 2014, ISBN 978-0-692-33690-8 (English).
- Uwe Gresser: Practical Guide to High Frequency Trading . tape 1 Basic: analyzes, strategies, perspectives. Springer Gabler, Wiesbaden 2015, ISBN 978-3-658-04934-8 .
- Uwe Gresser: Practical Guide to High Frequency Trading . tape 2 Advanced: Products, Systems, Regulation. Springer Gabler, Wiesbaden 2017, ISBN 978-3-658-13876-9 .
- Uwe Gresser: High-frequency trading: compact, understandable, up-to-date . Springer Gabler, Wiesbaden 2017, ISBN 978-3-658-19910-4 .
Individual evidence
- ^ First London Review of Books , vol. 36, no. 11. From the English by Niels Kadritzke
