SIE practice questionmediumTrade Execution
Which term describes a broker-dealer executing an order internally rather than routing to an exchange for execution?
- ABest execution
- BChurning
- CInternalization✓ Correct answer
- DExternalization
Explanation
Why C — Internalization
Internalization is when a broker fills an order from internal inventory or matches with another client, rather than sending to an exchange. Churning is excessive trading, best execution is a regulatory standard, and 'externalization' is not an industry term.
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