Trading Ahead

Trading Ahead- it is when an situation happens when a trading specialist receives a corresponding buy and sell order for the same security, but instead of matching the two offers and completing the transaction the trading specialist completes the offer with share from there own personal bank accounts. This is a violation of the rules set by the New York Stock Exchange (NYSE) called the negative obligation rule which requires the trading specialist to match up order whenever the option comes up. But by trading ahead the trading specialist gets a better deal for themselves and the companies they work for but they also may have created a worse situation for the other traders.