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Securities and Futures Markets: Efforts to Detect Intermarket Frontrunning

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Report Type Reports and Testimonies
Report Date Sept. 26, 1991
Report No. GGD-91-135
Subject
Summary:

Intermarket frontrunning is generally defined as an abuse in which market participants improperly trade stocks, stock options, stock index options, or stock index futures on the basis of nonpublic information about upcoming transactions. GAO found that (1) the self-regulatory organizations it reviewed have programs in place designed to detect stock options and stock index frontrunning; (2) the Securities and Exchange Commission (SEC) has reviewed such programs and recommended improvements that are under way; and (3) SEC is studying whether certain intermarket trading abuses, including some types of intermarket frontrunning, are occurring. In addition, the Commodity Futures Trading Commission has begun reviewing its self-regulatory organizations' programs.

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