internalization

Definition

A process by which a retail broker chooses to fill a client's order from its on inventory rather than sending it to a market maker for execution. When a brokerage firm internalizes the execution, it makes money both from the commission it charges for the transaction and from the spread.

Use internalization in a sentence

We practiced internalization and I thought it was a really good practice because it put us in a safe position.

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The internalization reduced the fees we were paying as we were facilitating the transaction in house instead of using the broker.

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Joe stopped utilizing a particular money manager because he felt their process of internalization was unethical and he didn't want legal trouble.

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