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. 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 >>
  2. 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 >>
  3. 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 >>
Related Articles
  1. 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.
  2. Trading

    High-Frequency Trading: A Primer

    An in depth look at how high-frequency trading works and who the players are.
  3. Financial Advisor

    Is Your Broker Acting In Your Best Interest?

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

    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.
  6. Personal Finance

    How Brokers Can Avoid A Market-Maker's Tricks

    Ensure that you and your clients are getting the best deal by avoiding these three pitfalls.
  7. Trading

    Brokers and Online Trading

    How do you find the right broker for your investment needs? Start by reading our broker tutorial.
RELATED TERMS
  1. Floor Broker (FB)

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

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

    The completion of a buy or sell order for a security. The execution ...
  4. Trading Floor

    The floor where trading activities are conducted. Trading floors ...
  5. Hybrid Market

    A securities exchange that facilitates trading through a blend ...
  6. Give Up

    A procedure in securities or commodities trading where the executing ...
Hot Definitions
  1. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  2. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
  3. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  4. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
  5. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  6. Capital Asset Pricing Model - CAPM

    A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities. ...
Trading Center