Which action is prohibited by the Swiss Bankers Association Guidelines?

Which action is prohibited by the Swiss Bankers Association Guidelines?

• A. Providing front-page news to clients
• B. Front-running and parallel running
• C. Offering free bets
• D. Selecting only the highest price for clients

Answer: (B)

In these guidelines, actions that misuse client information to gain an advantage for the bank are not allowed. Front-running is a clear example: a broker uses knowledge of a client’s pending order to trade ahead of that order and profit from the anticipated price move. Parallel running is a related abuse where trades are executed in tandem with a client’s order to benefit the bank. Both undermine market fairness and trust, so they’re prohibited by the Swiss Bankers Association Guidelines. The other options aren’t identified as the prohibited practices described here; they touch on marketing or execution concerns, but they don’t capture the specific misconduct of exploiting client orders in the way front-running and parallel running do.

In these guidelines, actions that misuse client information to gain an advantage for the bank are not allowed. Front-running is a clear example: a broker uses knowledge of a client’s pending order to trade ahead of that order and profit from the anticipated price move. Parallel running is a related abuse where trades are executed in tandem with a client’s order to benefit the bank. Both undermine market fairness and trust, so they’re prohibited by the Swiss Bankers Association Guidelines.

The other options aren’t identified as the prohibited practices described here; they touch on marketing or execution concerns, but they don’t capture the specific misconduct of exploiting client orders in the way front-running and parallel running do.