DEFINITION of Jitney
Jitney refers to a broker who has access to a stock exchange performing trades for one who does not. The term may also refer to trading done to fraudulently boost volume. In this case, the trading may involve only two brokers who trade the stock back and forth to earn commissions and to increase trading volumes in order to give the impression of market interest.
BREAKING DOWN Jitney
"Jitney" in the first sense of the word could refer to a broker whose volume of business is not sufficient to maintain a trader on the exchange who would, therefore, give its orders to a large dealer for execution. This may also be done fraudulently as a way to create the impression of more brokerage interest in a stock.
In the second sense, "jitney" or a "jitney game" is similar to circular trading, which a fraudulent practice that is done to demonstrate that a stock has liquidity or to maintain a stock's price. This may, in turn, induce others to purchase the stock. IPOs and penny stocks may particularly susceptible to this practice, which serves to give the impression of intense interest in a stock. Like circular trading, jitney games are illegal.