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Bucketing is an illegal practice defined by Investopedia as "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 further explains "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 "
Barron's Finance & Investment Handbook adds that the broker "executes a customer's order for the broker's own account instead of releasing the order to the market."
Investopedia further explains "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 "
Barron's Finance & Investment Handbook adds that the broker "executes a customer's order for the broker's own account instead of releasing the order to the market."
You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
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