Anticipatory Hedging

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The partial or complete execution of a hedge transaction prior to execution of the actual position. This activity is subject to regulatory requirements that differ among products, exchanges, and regulatory authorities.

Practice

Template:Infobox Midpage Need Sponsor Right If allowed, a trader may choose to execute a partial or complete hedge to a trade prior to execution of that trade. This 'pre-hedge' reduces the risk to the executing firm by shifting market impact to the customer and other market participants involved in the security.

Controversy

Legalized Frontrunning? Rules differ across product classes and exchanges.

References

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