The Municipal Securities Rulemaking Board, at its meeting in Boston next week, will consider whether to create a rule to crackdown on front running as well as request comments on applying best execution practices for municipal bonds.

There is currently no MSRB rule on front running, a type of insider trading that occurs when a dealer uses non-public knowledge to execute advantageous trades either for preferred customers or the firm’s own accounts. A dealer might that has a customer who wants to sell a large dollar amount of securities might, for example, to choose to sell off its own holdings of that debt before the big sale hits the market and depresses the price. It could also include trading on other types of inside information, such as unreleased rating agency reports or financial data.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.