What is the main concern regarding front running?

Front running is a practice where a broker or trader executes orders on a security for their own account while taking advantage of non-public information about a customer's order. This unethical behavior typically occurs when a trader knows that a pending order will influence the price of a stock and then acts in their own interest before executing the client's order.

The main concern regarding front running is that it undermines customer trust and fairness in the market. Customers expect that their orders will be executed fairly and that their interests will be prioritized. When brokers engage in front running, they prioritize their own profitability over the client's interests, creating a significant conflict of interest. This practice can harm the relationship between clients and brokers, as it creates an environment of suspicion and doubt regarding the broker's intentions and integrity.

The other options suggest outcomes that are positive, which is contrary to the detrimental effects of front running. It does not lead to favorable prices for all customers; instead, it can result in adverse prices for those whose trades are impacted. Additionally, rather than increasing market transparency, front running can increase information asymmetry, making the market less fair. Finally, while it may be observed among some traders, characterizing it as a common practice among successful traders disregards the ethical implications and potential legal repercussions