Bucketing

Filed Under » ,
Dictionary Says

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.
Investopedia Says

Investopedia explains 'Bucketing'

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

Related Definitions

  • Bucket Shop

    1. A fraudulent brokerage firm that uses aggressive telephone sales tactics to sell securities that the brokerage owns and wants to get rid of. The securities they sell are typically ...
    Read More »
  • Churning

    1. An unethical practice employed by some brokers to increase their commissions by excessively trading in a client's account. This practice violates the NASD Fair Practice Rules. It is ...
    Read More »
  • Circular Trading

    A fraudulent trading scheme where sell orders are entered by a broker who knows that offsetting buy orders, the same number of shares at the same time and at the same price, either have ...
    Read More »
    • Execution

      The completion of a buy or sell order for a security. The execution of an order happens when it is completely filled, not when it is placed by the investor. When the investor places the ...
      Read More »
    • Front Running

      The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients have been given the information.
      Read More »
    • Guilt-Edged Investment

      A transaction that makes money by unethical means. Culprits supposedly feel guilty having made money in such an unscrupulous way.
      Read More »
    • Jitney

      A situation in which one broker who has direct access to a stock exchange performs trades for a broker who does not have access. A fraudulent activity in the penny stock market ...
      Read More »
    • Pump And Dump

      A scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. The perpetrators of this scheme, who already ...
      Read More »
    • Portfolio Pumping

      The illegal act of bidding up the value of a fund's holdings right before the end of a quarter, when the fund's performance is measured. This is done by placing a large number of orders ...
      Read More »
    • Cross Trade

      A practice where buy and sell orders for the same stock are offset without recording the trade on the exchange, which is outlawed on most major stock exchanges. This also occurs when a ...
      Read More »

Articles Of Interest

Partner Links