I just spoke with my broker and he said that not only can he see the orders lined up for 400 of his clients accounts, but that he can use that information to trade for 14 accounts under POA. This sounds really shady but he says all brokers can trade POA accounts as long as they don't exceed the threshold for registering as a CTA. Can anyone comment on this. How do Jim Simons and Paul Tudor Jones and other skilled traders prevent their brokers from trading along side them since they place multiple orders in the same direction. The broker said he can do it as long as he doesn't front run the order but a lot of skilled traders scale up with multiple orders so technically he would be front running after the first order. Can someone comment on this.
He’s correct. I could see 200k accounts before and I could still trade in the same products as long as I didn’t frontrun them. My orders were marked PRO giving retail traders an advantage though.
Because as long as there is no front-running, the broker is in the same boat anyway with his customers. The future is uncertain for everyone including the broker. The outcome of the trade is unknown to everyone (Including the most skilled traders).
But say a big trader wants to submit 10 market orders of 100 each. Is it front running if the broker places a trade for his POA clients after the 1st 100 but before the 9 other orders for 100. Or say the broker places a trade after the 5th order for 100 but before the other 5 orders.
Material Non Public is about insider trading which gets you jail time if convicted. Front running could also be an issue, but the compliance officer of the firm can be going with on insider. Lots of devils in the details. https://www.cftc.gov/complaint If the circumstances are as you describe start shopping for that new Bentley
Not much prevented me. . . but one of the top guys I saw his account history go from 8 million down to 2 million and up to 40 million. I didn't want to go along for a downward ride and wanted to do my own trading. I saw the trades but didn't understand the rationale behind them. Later on, he opened his own fund and I invested some my family's money in it. Though his self-directed account beats his Fund Performance due to common constraints that funds usually have.