A trade that occurs within a brokerage. In an in-house trade, a broker who receives an order from a customer to buy a security does not find an outside seller, but rather fills the order from within the brokerage's own inventory of the security. This may or may not result in the best price for the client, but is almost always profitable for the brokerage.
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Execution of a customer order within a brokerage firm rather than on an exchange. For example, a brokerage firm might match a customer order to buy at $10 1/2 with another customer order to sell the same stock at $10 5/8 . An in-house trade is likely to be profitable for the brokerage firm but does not necessarily result in customers obtaining the best price. Compare preference. See also Rule 19c-3.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.