DEFINITION of 'Bucketing'

A situation where, in an attempt to make a short-term profit, a broker confirms an order to a client without actually executing it. A brokerage which engages in unscrupulous activities, such as bucketing, is often referred to as a bucket shop.


If the eventual price that the order is executed at is higher than the price available when the order was submitted, the customer simply pays the higher price. On the other hand, if the execution price is lower than the price available when the order was submitted, the customer pays the higher price and the brokerage firm pockets the difference

  1. Execution

    The completion of a buy or sell order for a security. The execution ...
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    An unethical investment that generates profits for the investor. ...
  3. Cross Trade

    A practice where buy and sell orders for the same stock are offset ...
  4. Jitney

    A situation in which one broker who has direct access to a ...
  5. Circular Trading

    A fraudulent trading scheme where sell orders are entered by ...
  6. Front Running

    The unethical practice of a broker trading an equity based on ...
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