The (Questionable) Legality of High-Speed 'Pinging' and 'Front Running' in the Futures Markets

92 Pages Posted: 4 May 2014 Last revised: 23 Jan 2015

See all articles by Gregory Scopino

Gregory Scopino

Georgetown University Law Center

Date Written: July 21, 2014


Institutional investors contend that high-frequency trading (HFT) firms engage in high-speed “pinging” and “front running” of their large orders for trades. By sending out lightning fast “ping” orders for trades that operate much like sonar in the ocean, HFT firms can detect when institutional investors will make large trades in futures contracts. Once a large trade has been detected, an HFT firm rapidly jumps in front of the institutional investor, buying up the liquidity in the contract and selling it back at higher or lower prices (depending on if it was a buy or a sell order).

None other than Warren Buffett’s right-hand man, Charles Munger, has called the HFT practice “evil” and “legalized front running.” While many criticize these HFT tactics, they accept their legality at face value. But what if that understanding is incorrect?

This Article posits that at least some high-speed pinging tactics arguably violate at least four provisions of the Commodity Exchange Act – the statute governing the futures and derivatives markets – and one of the regulations promulgated thereunder. The better approach is not to view high-speed pinging as a form of front running or insider trading, but as analogous to disruptive, manipulative or deceptive trading practices, such as banging the close (submitting a high number of trades in the closing period to influence the price of a contract), spoofing (submitting an order for a trade with the intent to immediately cancel it), or wash trading (self-dealing, or taking both sides of a trade), all of which are illegal.

Keywords: Dodd-Frank Act, Commodity Exchange Act, Commodity Futures Trading Commission, financial regulation, high-frequency trading, automated trading systems, market manipulation, insider trading, securities regulation, futures, derivatives, swaps

Suggested Citation

Scopino, Gregory, The (Questionable) Legality of High-Speed 'Pinging' and 'Front Running' in the Futures Markets (July 21, 2014). Connecticut Law Review, Vol. 47, 2015, P. 607, Available at SSRN:

Gregory Scopino (Contact Author)

Georgetown University Law Center ( email )

500 New Jersey Ave NW
Washington, DC 20001
United States
6075927556 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics