What is Ginzy trading?

Ginzy trading is an order of different prices placed by a floor broker. It occurs when a floor broker attempts to avoid an exchange's rule against trading at fractional increments, often called "split ticks". Ginzy trading works when a floor broker executes a particularly large order and fills a portion of the order at one price, but then fills the remainder of the order at a different price. Hence, the floor broker has quoted different prices to different customers on the same order.

This not only is considered unethical; it also is illegal. Some exchanges have technology systems in place to prevent these illegal trades, but many smaller exchanges do not have such strategies in place. Ginzy trading is in violation of the Commodity Exchange Act as set forth by the United States Commodity Futures Trading Commission.

(For more on this topic, read Understanding Dishonest Broker Tactics.)

This question was answered by Richard C. Wilson.

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