If a Participant knows that a client's unentered order to buy a specific stock will significantly impact the price of a major equity index, why is purchasing index options for the firm's account considered a violation of UMIR Policy 4.1?

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Accepted Answer

Frontrunning rules include cases where a trade in an index product (option or future) is made based on knowledge of a large order for a component security that will move the index itself.

If a Participant knows that a client's unentered order to buy a specific stock will significantly impact the price of a major equity index, why is purchasing index options for the firm's account considered a violation of UMIR Policy 4.1?

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