What is Front-running ? Also know the impact of Front running and role of Regulator

Front-running in the Indian stock market is an illegal and unethical practice where a broker or trader takes advantage of non-public information about upcoming large trades to execute their own trades beforehand. Here's a breakdown:   What is Front-Running? Essentially, it involves a trader or broker acting on advance knowledge of a client's large order that is likely to move the market.  They place their own trades before the client's order is executed, aiming to profit from the anticipated price movement.   This gives them an unfair advantage over other market participants who don't have access to this information.   How it Works: A large institutional investor (like a mutual fund) places a significant order to buy or sell a particular stock. A broker or trader who has knowledge of this order then buys or sells the same stock for their own account before the client's order is executed.  When the client's large order is processed, it causes the stock price to move in the anticipated ***** front-runner then sells their shares for a profit. Impact of Front-Running: Erodes trust: It undermines market fairness. Distorts prices: It creates artificial price fluctuations. Harms investors: Regular investors face unfair price changes. Damages integrity: It violates ethical trading principles. Legal action: SEBI imposes penalties. Role of Regulator The Securities and Exchange Board of India (SEBI) actively monitors and takes strict action against front-running. Penalties can include substantial fines and bans from trading.   SEBI's Role: SEBI plays a crucial role in detecting and preventing front-running through surveillance and enforcement mechanisms.  They use data analytics and artificial intelligence to identify suspicious trading patterns. In essence, front-running is a serious offense that damages the integrity of the Indian stock market.