How Can an Exchange’s Own Trading Desk Create Information Asymmetry?

An exchange's own trading desk can create information asymmetry if it has privileged access to non-public, real-time data about client order flow, trade volumes, or upcoming listings. By trading based on this internal, confidential information, the desk can profit at the expense of its clients or the broader market.

This is a severe conflict of interest and a form of illegal front-running or insider trading, which regulators attempt to prevent through "Chinese Walls" and strict internal policies.