Front-Running in Australia: 2025 Market Rules & Investor Insights

Front-running is a term that sparks heated debates in Australia’s financial circles. With ASIC intensifying its focus on market integrity in 2025, understanding how front-running works—and why it matters—is more important than ever for local investors, traders, and compliance professionals.

What Is Front-Running and Why Does It Matter?

Front-running occurs when someone with advance knowledge of a pending order (often a broker or insider) trades on that information ahead of the client’s transaction. This practice undermines fair market operations and can erode trust between clients and financial institutions. In the Australian context, front-running has historically been prosecuted under market misconduct provisions, but the lines can sometimes blur between illegal activity and aggressive trading tactics.

Common front-running scenarios include:

• A broker receives a large buy order from a client and buys the stock for their own account before executing the client’s order, hoping to profit from the subsequent price increase.

• Fund managers or traders with access to confidential information execute personal trades in advance of large institutional transactions.

While front-running is illegal, the rapid evolution of algorithmic trading and high-frequency platforms in 2025 has made detection more complex. Regulators are now leveraging advanced surveillance tools to monitor suspicious trading patterns in real time.

2025: Crackdowns, Compliance, and New Technology

In 2025, ASIC has ramped up its surveillance of equity and derivatives markets, introducing enhanced analytics that flag potential front-running behaviors. The regulator’s focus has sharpened on:

• Real-time monitoring: New AI-driven systems scan for unusual trading activity that precedes large block trades, particularly in ASX-listed shares and ETFs.

• Broker accountability: Firms are required to demonstrate robust internal controls and clear audit trails for order handling.

• Expanded whistleblower protections: Individuals reporting suspected front-running are now granted greater anonymity and legal safeguards.

Recent enforcement actions highlight the risks: In early 2025, ASIC fined a major brokerage after detecting a pattern where junior traders front-ran institutional client orders in mid-cap mining stocks. The incident triggered industry-wide reviews of compliance frameworks and led to a wave of employee training on the distinction between legal pre-hedging and illegal front-running.

Investor Impact: What to Watch for and How to Protect Yourself

For everyday investors and SMSF trustees, front-running can mean less favourable prices and diminished returns. Here’s how to stay protected in 2025’s fast-evolving markets:

• Ask about execution policy: When working with brokers or advisers, request transparency about how your orders are handled and prioritised.

• Monitor trade confirmations: Unusual price movements between order placement and execution could signal questionable practices.

• Leverage technology: Many online brokers now provide real-time trade status updates and alerts for suspicious activity. Use these tools to stay informed.

• Stay updated on ASIC announcements: Regulatory news can offer clues about emerging risks and industry best practices.

While most licensed Australian brokers operate within the law, the temptation to front-run—especially in volatile markets—remains a concern. The key is vigilance, education, and choosing partners with a proven track record of integrity.

Case Study: The 2025 ASX Mid-Cap Sweep

In March 2025, ASIC’s new surveillance algorithms detected a cluster of trades where certain brokers consistently bought shares moments before large client orders hit the market. The regulator’s swift action led to multi-million-dollar fines and reinforced the importance of robust compliance systems. For investors, the episode was a timely reminder to scrutinise trading partners and demand transparency around order execution.