How to prevent brokers front-running orders?
- Thread starter chinook
- Start date
You know your floor brokers well, and use only those you trust. A related point is that not all floor brokers are equally skilled or have the same amount of clout on the floor. I regularly split up my large orders, and enter them in pieces through my different floor brokers, to see who is getting me the best fills.
Jessie
Jessie
Splitting up orders into small lots and placing them in .02 (or small) increments discourages the SPEc. from sitting in front of your order. He can still pick a price range, but it makes it harder to make $$ off your flow and use it for protection..
Also you can feed him additional pieces as he fills you. This forces him to not take the contra side of your order...
Transact Futures
Transact Futures
May be they are doing their own execution via the electronic trade. I doubt it but it is a thought.
Law maybe only 
http://www.securitiesfraudfyi.com/investment_brokerage_fraud.html
Best Execution - The stockbroker must find the best deal for the client. As an advisor, he or she is responsible to the client for the money being invested. An advisor must assess what the appropriate risk level for the investor is, and which market will provide that investor with the greatest gains. The stockbroker is responsible to buy and sell within this market.
Trading restrictions for employees of brokerage houses
Information control between departments of brokerage firms
http://www.knighttradingfraudinfocenter.com/information.php
Knight Trading Group, a leading market maker* and asset management firm, is one of Nasdaqâs* biggest players. It is parent company to Knight Securities L.P. The largest comprehensive market maker in the Nasdaq and OTC* (over-the-counter) securities, Knight Securities L.P. is a major participant in those markets.
In June of 2002, more charges against Knight aroseâthis time perpetrated by a former employee, Robert Stellato. When he was head of Knightâs institutional trading, Stellato claims to have witnessed multiple violations of NASD and SEC rules. Among his accusations are allegations of front running stocks, a policy in which traders perform their own transactions ahead of their customersâ orders. Front running usually results in a lower price for the trader and a higher price for the customer. Stellato claims that Knight traders engaged in front running with the knowledge of Knightâs CEO, other executives, and the companyâs attorney. Knight has denied the allegations.
http://www.securitiesfraudfyi.com/investment_brokerage_fraud.html
Best Execution - The stockbroker must find the best deal for the client. As an advisor, he or she is responsible to the client for the money being invested. An advisor must assess what the appropriate risk level for the investor is, and which market will provide that investor with the greatest gains. The stockbroker is responsible to buy and sell within this market.
Trading restrictions for employees of brokerage houses
Information control between departments of brokerage firms
http://www.knighttradingfraudinfocenter.com/information.php
Knight Trading Group, a leading market maker* and asset management firm, is one of Nasdaqâs* biggest players. It is parent company to Knight Securities L.P. The largest comprehensive market maker in the Nasdaq and OTC* (over-the-counter) securities, Knight Securities L.P. is a major participant in those markets.
In June of 2002, more charges against Knight aroseâthis time perpetrated by a former employee, Robert Stellato. When he was head of Knightâs institutional trading, Stellato claims to have witnessed multiple violations of NASD and SEC rules. Among his accusations are allegations of front running stocks, a policy in which traders perform their own transactions ahead of their customersâ orders. Front running usually results in a lower price for the trader and a higher price for the customer. Stellato claims that Knight traders engaged in front running with the knowledge of Knightâs CEO, other executives, and the companyâs attorney. Knight has denied the allegations.