Citizens of the Virtual Republic of Wazua who understand Bonds and their market, kindly explain to me (us) lesser mortals what “Front Running” is in the Bond Market.
I tried Google researching but all I am getting is a lot of many English.
According to an article in the Kenyan Wall Street, somebody made Kshs. 260 million between Njaanuary 2016 and June 2017, just like that, using “Front Running”.
He was apparently aided and abetted by two dealers, one at CBA Capital and the other at Africa Investment Bank.
Copy and Paste Extract:Quote:The Capital Markets Authority (CMA) is investigating bond trades carried out by a Kenyan businessman between January 2016 and June 2017.
According to whistle-blowers, the businessman is alleged to have been working with “approved dealers and licensed brokers to commit market abuse by front-running” Treasury Bonds investors, resulting in gains to the conspirators and losses to the investors.
“Front-running is dual trading and a type of insider trading which involves the use of privileged knowledge of customers’ orders to buy and sell, in the hands of licensed brokers and its dealers, to trade their own account ahead of customers gain.”
The dual trading resulted in gains of about Sh260 million with Sh110 million of the amount being transferred to two dealers of CBA Capital and Africa Investment Bank.
“The Businessman” told the CMA during a meeting that during the aforementioned period, he was providing dealers of licensed brokers with loans “which facilitated the dual trading and he will henceforth stop giving loans.”
Additionally, he said the two are his partners in a construction business.