What is Front-running?

Front-running is trading in stock, or any other financial asset by a broker who has inside knowledge of a future transaction that is about to affect its price substantially.

Another tactic for front-running is acting upon an analyst recommendation that has not yet been published.

A straightforward example of front-running occurs when a broker exploits market-moving knowledge that has not yet been made public.

Front-running is commonly confused with insider trading, but they are distinct.

Insider trading refers to a company insider who trades on advanced knowledge of corporate activities–for example, using their insider knowledge to buy or sell shares ahead of a major announcement.