Investor Push for Pre-Hedging Ban Overlooked in New Rules (2)

A push by the world’s biggest asset managers for a far-reaching crackdown against a divisive trading practice hit a roadblock on Monday.

Policy recommendations from the International Organization of Securities Commissions — made up of around 130 national financial regulators including the US Securities and Exchange Commission — stopped short of clear guidance against pre-hedging where there is competition to win a trade. Instead, the body adopted a framework consisting of general principles.

Pre-hedging involves a dealer using information from an investor about a planned trade to place their own order beforehand. While banks say this helps cushion their exposure ...