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Front Running

Published: 3rd May, 2024

Context

In an effort to create an institutional framework that will prevent front-running and fraudulent transactions in asset management firms (AMCs), SEBI has approved changes to its mutual fund laws.

About Front Running

  • Other terms for front-running include tailgating and forward-trading.
  • Trading stocks or any other financial asset while possessing intimate knowledge of a forthcoming transaction is known as front-running.

Fact Box: About asset management company (AMC):

  • A financial organization that administers and supervises the activities of mutual funds and other investment vehicles is known as an asset management company (AMC).
  • These businesses are essential to the investing sector because they develop and manage a range of fund solutions that cater to investors' different financial objectives.

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