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 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

    High-Frequency Trading: A Primer

    An in depth look at how high-frequency trading works and who the players are.
  2. Trading

    The Best Low-Cost, Web-Based Trading Brokers

    With this table, investors can differentiate between top low-cost, web-based trading brokers by price, capabilities, and offerings.
  3. Investing

    Discount Broker

    A stockbroker who carries out buy and sell orders at a reduced commission compared to a full-service broker, but provides no investment advice.
  4. 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.
  5. 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.
  6. Trading

    Broker Summary: Interactive Brokers

    Learn more about IB, an online broker specializing in routing orders and executing and processing trades on more than 90 electronic exchanges and trading venues worldwide.
  7. 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.
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. Execution

    The completion of a buy or sell order for a security. The execution ...
  4. Hybrid Market

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

    A procedure in securities or commodities trading where the executing ...
  6. Pork Chop

    An arrangement on the floor of the NYSE whereby clerks cover ...
Hot Definitions
  1. IRR Rule

    A measure for evaluating whether to proceed with a project or investment. The IRR rule states that if the internal rate of ...
  2. Short Covering

    Short covering is buying back borrowed securities in order to close an open short position.
  3. Covariance

    A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns ...
  4. Liquid Asset

    An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally ...
  5. Nostro Account

    A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts ...
  6. Retirement Planning

    Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve ...
Trading Center