Ethics in trading

Hi, does anybody understand the key point(s) of the LOS 44.p ? Why trading is based on word of honor (and not rules or laws) ? Why trading between buy-side and sell-side traders is becoming MORE adversarial ? If sell-side are dealers and buy-side are traders. It’s normal that they are adversial (one looses while the other wins) I have read the Stalla, the Schweser and the CFAI book and I understand none of them. Thanks in advance.

If they both had a zero informational advantage , their probability of loss is equal. Of course hindsight is a wonderful thing and sitting on your comfy couch after the fact you can say one has won and one has lost , but at the moment of the trade did one party know more than the other? Dealers become adversaries if they come to know or believe that the huge bid-ask they’re charging is actually quite low if you factor in the buyer’s knowledge of the stock.So while they work to complete the trade , they know they might be losing too , if you know more than them ( and this is not insider trading stuff , just your astute analysis versus their poor insight )

If I understand well you point, by “my word is my honor” means traders promisses to not have informational advantage. Thanks for the explnation. It is also said that “because brokerage commissions have fallen the temptation for a trader is to shifts costs to those that are implicit, rather thant explicit” and that the reason why trading between b-side and s-side becomes more adversial. I don’t catch this “temptation”

trader pretends to have more knowledge - to show he has informational advantage. [trying to show there is some implicit information he holds, while he really might not].