In plain language
In its traditional regulatory sense, front-running means trading ahead of an imminent order by exploiting material nonpublic knowledge of that order and placing one's interest before the customer's.
Elements to reconstruct
Relevant evidence includes the known order, whether the information was public, timing, related instruments, beneficiary account, and the relationship between trades. Some unrelated, hedging, or facilitating transactions may be permitted under specified conditions and consent; the applicable rule depends on market and jurisdiction.
Being first is not enough
Anticipating public flow, reacting faster, or buying before a price rise does not automatically prove front-running. Price sequence alone does not establish knowledge of an order, a duty to the customer, or intent.
Blockchain usage
In MEV, the term often describes placing a transaction before another transaction observed in a mempool or bundle to capture its effect. Economic similarity does not make the legal classification, actors, and evidence identical to those in traditional markets.
Sources
- FINRA, Rule 5270 — Front Running of Block Transactions — Defines material nonpublic information, imminent block orders, related instruments, and permitted transactions.
- Ethereum.org, Maximal extractable value (MEV) — Describes transaction ordering, generalized frontrunners, and sandwich trading on blockchains.
- BIS, Miners as intermediaries: extractable value and market manipulation in crypto and DeFi — Compares MEV, traditional front-running, and blockchain transaction ordering.
Links
Back-running · MEV · Slippage