# What This Bill Does: Stopping Market Makers from Trading Ahead of Customers

This bill targets a specific type of unfair trading practice called "trading ahead." Here's what's actually happening: When you place an order to buy or sell a stock through a market maker (a financial firm that buys and sells securities), that market maker learns what you want to do before the trade happens. The bill says market makers can't use that information to make their own trades first, before executing your order. Think of it like a store clerk who learns you want to buy the last item on the shelf, then quickly buys it themselves before selling it to you at a higher price—that's the kind of behavior this bill prohibits.

The bill creates a legal duty that market makers must treat customer information as confidential and only use it to actually execute the customer's order. Every year, the CEO of each market-making firm has to certify in writing to the Securities and Exchange Commission that their company hasn't violated this rule. If someone working at a market maker knowingly breaks this rule, they face serious personal consequences: fines of at least $50,000 or twice the profit they made from the illegal trade, whichever is larger. If someone engages in a pattern of this behavior, they could face fines up to 200 percent of their compensation and up to five years in prison.

The bill gives the SEC 90 days to write detailed rules explaining exactly how this will work and allows them to create exceptions if needed. The rules take effect six months after the bill becomes law. The goal is to protect regular investors and traders from having market makers secretly profit off the information they provide when placing orders, making the stock market fairer for everyday people investing their money.

To amend the Securities Exchange Act of 1934 to prohibit trading ahead by market makers, and for other purposes.

Green, Al

 <p>This bill creates specified duties for market makers&#8212;individuals and firms that buy and sell securities, such as brokerage houses&#8212;and sets forth penalties for violations of those duties. Specifically, the bill establishes for market makers a duty of trust and loyalty to the customer upon receipt of an order and deems the information in the order as material, non-public information. Furthermore, the Chief Executive Officer of a market maker must annually certify compliance with such responsibilities. The bill establishes civil and criminal penalties for violations.</p>