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Optimal hedging of an informed broker facing many traders
Philippe Bergault, Pierre Cardaliaguet, Wenbin Yan
https://arxiv.org/abs/2506.08992 https://

Optimal hedging of an informed broker facing many traders
This paper investigates the optimal hedging strategies of an informed broker interacting with multiple traders in a financial market. We develop a theoretical framework in which the broker, possessing exclusive information about the drift of the asset's price, engages with traders whose trading activities impact the market price. Using a mean-field game approach, we derive the equilibrium strategies for both the broker and the traders, illustrating the intricate dynamics of their interactions. …