Trading Ahead of Customer Orders

What this video covers

• Why the Manning rule restricts, rather than bans, proprietary trading while a customer order is resting
• The four facts that trigger the prohibition: an equity security, acceptance and holding, a same-side proprietary trade, and a price that would satisfy the customer order
• Why the rule protects orders from both the member's own customers and customers of another broker-dealer
• Why corporate bonds and other non-equity instruments fall outside this specific trading ahead prohibition
• How the immediate cure works: execute the customer order immediately thereafter, up to the size traded, at the same or better price
• Why a partial fill can satisfy the size requirement, and why the member's own execution price sets the cure baseline
• The firm's separate duties to maintain a written methodology for execution and priority of all pending orders and ensure it is consistently applied