What are front line instruments?

Front line instruments are financial assets which are usually purchased by regular or retail investors on a stock exchange. They represent a direct and transparent claim on a company or government. Such instruments include equity (stocks) and debt (bonds).

As opposed to other financial instruments such as structured notes or futures contracts which may derive from front line assets, they trade directly in exchange for cash or securities. Their price changes reflect market forces determined by supply and demand.

The term "front line" stems from the historical distinction between commercial and investment banking when commercial banks were not allowed to engage in brokerage or investment banking activities and as a result, investment banking became known as the "front line" of banking in the United States during the 20th century.