A:

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.

RELATED FAQS
  1. Why are traders on the floor of the exchange?

    Before the advent of electronic trading platforms, the floor of the stock exchange was the location for market transactions ... Read Answer >>
  2. How do you know if a trade placed to a broker is confirmed?

    Learn how to check if trades placed with brokers online or over the telephone have been filled and confirmed. Explore different ... Read Answer >>
  3. How do I place an order to buy or sell shares?

    Read a brief overview of how to open a brokerage account, how to buy and sell stock, and the different kinds of trade orders ... Read Answer >>
  4. How long does it take a broker to confirm a trade after it is placed?

    Learn about placing trades with a broker and the amount of time required to received confirmation of different types of orders, ... Read Answer >>
  5. Does a broker always have to buy a stock if I want to sell it?

    There are certain times when a broker must purchase the stock that you are selling. For example, if the broker is a market ... Read Answer >>
  6. What's the difference between a market order and a limit order?

    Buy and sell trades with market orders at the present stock price and execute limit orders if the stock price falls within ... Read Answer >>
Related Articles
  1. Markets

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  2. Trading

    Is Your Forex Broker A Scam?

    While the forex market is slowly becoming more regulated, there are many unscrupulous brokers who should not be in business.
  3. Trading

    How To Choose The Right Online Trading Broker

    The online broker market is becoming more competitive, but differences exist in services that can help traders choose the broker that’s right for them.
  4. Trading

    How Forex Brokers Make Money

    Forex brokers set their prices based on commission, spread, or a combination of both. Traders have to be cautious in the thinly regulated forex market.
  5. Managing Wealth

    Picking Your First Broker

    If you're a rookie investor, your first big investment decision should be an informed one.
  6. Trading

    Price Shading In The Forex Markets

    This practice puts brokers ahead of their clients, but it doesn't have to be a negative for traders.
  7. Trading

    Is Your Broker Acting In Your Best Interest?

    Learn the clues you'll need to determine whether you've chosen a reputable professional.
  8. Investing

    Why Use a Discount Broker?

    A discount broker is a stockbroker that does not offer clients investment advice, but trades shares for a smaller commission than a full-service broker.
  9. Financial Advisor

    Broker Or Trader: Which Career Is Right For You?

    A day in the life of a broker or trader is an exciting and varied one. Find out how to decide between these two financial professions.
  10. Markets

    What Does a Broker Do?

    In the investment world, broker is a term used to refer to an individual or entity that helps facilitate trading in financial securities.
RELATED TERMS
  1. Ginzy Trading

    In floor trading, the practice of selling part of an order at ...
  2. Floor Broker (FB)

    An independent member of an exchange who is authorized to execute ...
  3. Two Dollar Broker

    A floor broker who executes orders for other brokers who cannot ...
  4. Execution

    The completion of a buy or sell order for a security. The execution ...
  5. Give Up

    A procedure in securities or commodities trading where the executing ...
  6. Executing Broker

    The broker or dealer that finalizes and processes an order on ...
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center