Internalization
A decision by a brokerage to fill an order with the firm's own inventory of stock. Investopedia Says:
When a brokerage receives an order they have numerous choices as to how it should be filled. They can send it to an exchange, an ECN, market maker, a regional exchange or fill it by using the firm's own inventory of stock.
Firms often internalize orders when they can because they profit from the spread. Related Terms:
Broker
Electronic Communication Network - ECN
Exchange
Market Maker
Market Maker Spread
Regional Stock Exchange
Spread |