trading ahead

Definition

Situation where a specialist receives a corresponding buy and sell order for the same security, but instead of matching the two orders up and allowing that deal to be transacted, the specialist completes the offer with shares of the security from his or her account. This is a violation of the rules of the New York Stock Exchange, specifically the negative obligation rule which requires the specialist to match up orders whenever possible. By trading ahead, the specialist gets a better deal for themselves or the firm, and possibly creates a worse situation for the other traders.
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