Explain the Concept of ‘Front-Running’ and Its Relationship to Slippage

Front-running is an illegal practice where a party with non-public knowledge of a pending large order places their own order ahead of it to profit from the anticipated price movement. When a large order is executed, it can cause significant slippage.

Front-running exacerbates this issue by preemptively moving the price against the large order, increasing the final execution cost and the severity of the slippage for the original trader.