Advanced English Dialogue for Business – Prearranged trading

Listen to a Business English Dialogue About Prearranged trading

Sofia: Hi Ariel, have you heard about prearranged trading in business and finance?

Ariel: No, I haven’t. What does it involve?

Sofia: Prearranged trading refers to the practice of arranging trades in advance between parties without competitive bidding, often to manipulate market prices or gain an unfair advantage.

Ariel: Oh, so it’s like making secret deals to control the market?

Sofia: Exactly. Prearranged trading is illegal and undermines the integrity and fairness of financial markets.

Ariel: Are there specific regulations or laws against prearranged trading?

Sofia: Yes, financial regulators have strict rules and enforcement mechanisms in place to detect and punish prearranged trading activities.

Ariel: What are some examples of prearranged trading schemes?

Sofia: Examples include wash trades, where the same party simultaneously buys and sells a financial instrument to create artificial trading volume, and matched orders, where parties coordinate to execute trades at predetermined prices.

Ariel: How do regulators detect and prevent prearranged trading?

Sofia: Regulators use surveillance systems, data analysis, and market monitoring tools to identify suspicious trading patterns and investigate potential instances of prearranged trading.

Ariel: What are the consequences for individuals or firms caught engaging in prearranged trading?

Sofia: They may face severe penalties, including fines, suspension or revocation of trading licenses, and even criminal prosecution in some cases.

Ariel: Thanks for explaining, Sofia. Prearranged trading sounds like a serious violation of market integrity.

Sofia: No problem, Ariel. It’s essential for maintaining fairness and transparency in financial markets and protecting investors from manipulation.