frontrunning
Trading on foreknowledge
Frontrunning is exploiting advance knowledge of pending transactions to profit at others' expense.
A broker who learns a client plans to buy a large stock position might purchase shares first, then sell after the client's order drives the price up.
In cryptocurrency, bots detect pending trades and insert their own transactions ahead in the queue.
The practice is illegal in traditional securities markets but endemic to decentralized finance: The transaction failed because of frontrunning.
Rapid oscillation rate
- arbitrageExploiting price discrepancies
- scalpingResale at inflated prices
- latencyDelay in system response
- co-locationSharing physical space
execution · liquidity · slippage · blockchain
Intentional misleading of others
- betrayalBreaking of trust
- misconductImproper professional behavior
- exploitationSelfish use of others
- underhandedSecretly dishonest or unfair
transparency · accountability · self-dealing · corruption · collusion · impropriety · dishonesty · opportunism
One with confidential access
- tradingExchanging for value
- securitiesTradeable financial assets
- SECStock market regulator
- violationBreaking of rules
illegal · prosecution · penalty · fines · disclosure · regulation · broker · FINRA
Disgraceful public affair
- investigationFormal examination of facts
- whistleblowerInsider who reports misconduct
- reformImprove by correcting faults
- oversightSupervision or inadvertent omission
high-frequency
Rapid oscillation rate
- arbitrageExploiting price discrepancies
- scalpingResale at inflated prices
- latencyDelay in system response
co-location · execution · liquidity · slippage · blockchain
deception
Intentional misleading of others
- betrayalBreaking of trust
- misconductImproper professional behavior
- exploitationSelfish use of others
underhanded · transparency · accountability · self-dealing · corruption · collusion · impropriety · dishonesty · opportunism · unscrupulous
insider
One with confidential access
- tradingExchanging for value
- securitiesTradeable financial assets
- SECStock market regulator
violation · illegal · prosecution · penalty · fines · disclosure · regulation · broker · FINRA · enforcement
scandal
Disgraceful public affair
- investigationFormal examination of facts
- whistleblowerInsider who reports misconduct
- reformImprove by correcting faults
oversight · class-action · restitution · ban
frontrunningfair dealing
Honest, equitable conduct principle
fiduciary duty · ethical trading · fair trading · compliance · level playing field
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