4 ms·

The author put "front-running" in scare quotes for a reason. See footnote 6, where he explains he's using the term in the Michael Lewis/IEX sense.

elecengin 11y ago
Agreed. Matt Levine is one of the few commentators that fully understands market microstructure. The Bloomberg View linked in a different comment (by John Arnold) is horrible with terminology, though.
- philipov 11y ago
  Doesn't the fact that he understands, and intentionally uses pejorative language make him dishonest?
  - evanpw 11y ago
    "Scare quotes ... may be used to imply that a particular expression is not necessarily how the author would have worded a concept." https://en.wikipedia.org/wiki/Scare_quotes https://en.wikipedia.org/wiki/Scare_quotes
    - aaronchall 11y ago
      Scare quotes are also bad composition. Since the author is the author, the author should word concepts correctly and take full responsibility for word choice.
      - philipov 11y ago
        Not only that, scare quotes are often used precisely to misrepresent an idea and then avoid responsibility for it, which seems like a pretty dishonest rhetorical strategy to me. He's technically "not lying," but many people won't notice the footnote nor appreciate the difference. All they will hear is "front-running == should be illegal"
mkinitcpio 11y ago
Ah, I read that but didn't parse it as the author trying to make the distinction between (misnamed) "front-running" and actual front-running. Probably still worth pointing out, since one of the activities is illegal and harmful (uses non-public information) and the other is just reacting quickly to the public market information.
- yummyfajitas 11y ago
  I subscribe to his column and I've read his criticism of Michael Lewis/IEX, so his snark is obvious to me. But I can see how this article in isolation might not convey that.
- jameshart 11y ago
  One of Matt Levine's consistent themes though is that there is often a very fine line between 'just reacting quickly to public market information' and illegal insider activity, so the scare quotes may be intended to imply a degree of 'you decide if you think this is completely above board'.
  - hueving 11y ago
    No, there is rarely a fine line. It's a very obvious line of "are you trading on information on the market". An HFT doesn't even have the ability to front-run unless they are also providing a brokerage service.
- Rimpinths 11y ago
  I've seen this type of behavior described as "order anticipation", which I think is a much better term. "Front running" means that you are using confidential information that an order will be submitted. "Order anticipation" means that are you using public information and you are anticipating that an order will be submitted.
- w23j 11y ago
  Yep. Levine's opinion of using the term "front-running" like that is made more explicit here: http://www.bloombergview.com/articles/2015-07-07/can-you-really-game-index-funds- http://www.bloombergview.com/articles/2015-07-07/can-you-rea... Liberately quoted: '[...] man, remember when "front-running" meant something? [...] But then came "Flash Boys," [...] And now, basically any time anyone trades on public information before someone else, it's "front-running," [...]'

elecengin 11y ago

Agreed. Matt Levine is one of the few commentators that fully understands market microstructure. The Bloomberg View linked in a different comment (by John Arnold) is horrible with terminology, though.

philipov 11y ago
Doesn't the fact that he understands, and intentionally uses pejorative language make him dishonest?
- evanpw 11y ago
  "Scare quotes ... may be used to imply that a particular expression is not necessarily how the author would have worded a concept." https://en.wikipedia.org/wiki/Scare_quotes https://en.wikipedia.org/wiki/Scare_quotes
  - aaronchall 11y ago
    Scare quotes are also bad composition. Since the author is the author, the author should word concepts correctly and take full responsibility for word choice.
    - philipov 11y ago
      Not only that, scare quotes are often used precisely to misrepresent an idea and then avoid responsibility for it, which seems like a pretty dishonest rhetorical strategy to me. He's technically "not lying," but many people won't notice the footnote nor appreciate the difference. All they will hear is "front-running == should be illegal"

mkinitcpio 11y ago

Ah, I read that but didn't parse it as the author trying to make the distinction between (misnamed) "front-running" and actual front-running. Probably still worth pointing out, since one of the activities is illegal and harmful (uses non-public information) and the other is just reacting quickly to the public market information.

yummyfajitas 11y ago
I subscribe to his column and I've read his criticism of Michael Lewis/IEX, so his snark is obvious to me. But I can see how this article in isolation might not convey that.
jameshart 11y ago
One of Matt Levine's consistent themes though is that there is often a very fine line between 'just reacting quickly to public market information' and illegal insider activity, so the scare quotes may be intended to imply a degree of 'you decide if you think this is completely above board'.
- hueving 11y ago
  No, there is rarely a fine line. It's a very obvious line of "are you trading on information on the market". An HFT doesn't even have the ability to front-run unless they are also providing a brokerage service.
Rimpinths 11y ago
I've seen this type of behavior described as "order anticipation", which I think is a much better term. "Front running" means that you are using confidential information that an order will be submitted. "Order anticipation" means that are you using public information and you are anticipating that an order will be submitted.
w23j 11y ago
Yep. Levine's opinion of using the term "front-running" like that is made more explicit here: http://www.bloombergview.com/articles/2015-07-07/can-you-really-game-index-funds- http://www.bloombergview.com/articles/2015-07-07/can-you-rea... Liberately quoted: '[...] man, remember when "front-running" meant something? [...] But then came "Flash Boys," [...] And now, basically any time anyone trades on public information before someone else, it's "front-running," [...]'