Pairing Off

AAA

DEFINITION of 'Pairing Off'

An illegal practice of a brokerage firm offsetting short and long positions between house accounts by collecting cash payments without physically delivering the securities.

INVESTOPEDIA EXPLAINS 'Pairing Off'

Pairing off can occur only by brokerage firms colluding with one another. Proper settlement of short and long positions require the delivery of physical securities be made within three business days after the transaction. By settling these positions with cash payments, the brokerage firms are able to manipulate the market by trading non-existent shares and circumventing settlement regulations.

RELATED TERMS
  1. Clearing

    The procedure by which an organization acts as an intermediary ...
  2. Kiting

    1. The act of misrepresenting the value of a financial instrument ...
  3. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
  4. Parking

    A form of kiting shares that a brokerage commits by moving long ...
  5. Short (or Short Position)

    1. The sale of a borrowed security, commodity or currency with ...
  6. Business Broker

    A professional who specializes in the purchase and sale of companies. ...
Related Articles
  1. Principal Trading and Agency Trading
    Investing Basics

    Principal Trading and Agency Trading

  2. 4 Dishonest Broker Tactics And How To ...
    Personal Finance

    4 Dishonest Broker Tactics And How To ...

  3. The Short And Distort: Stock Manipulation ...
    Active Trading Fundamentals

    The Short And Distort: Stock Manipulation ...

  4. What Investors Can Learn From Insider ...
    Markets

    What Investors Can Learn From Insider ...

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center