Final answer:
Insider trading refers to the illegal buying or selling of securities based on confidential information. In this case, the registered rep is using inside knowledge of an institutional client's purchase order to make a personal purchase, which is prohibited.
Step-by-step explanation:
When a registered representative places an order to purchase shares of ABC for his own account based on inside information about an institutional client's purchase order, it is considered illegal insider trading. Insider trading involves the buying or selling of securities based on material, non-public information that gives the trader an unfair advantage over other market participants. In this case, the registered rep is using confidential information for personal gain, which violates securities laws.