I guess internalization is not automatic. Special logic needed.
Brokers can also match up buyers and sellers on their own in a process known as “internalization.” If one client wants to buy 100 shares of Advanced Micro Devices and another wants to sell 100 shares, the two orders could be matched up internally, and Robinhood could collect the very small difference between what the buyer pays and the seller receives.
———- a veteran’s answer ———-
“I don’t think we have logic locally to cross against firm automatically. The trader would have to send an explicit order to cross against firm. There is a Smart Order Router layer that intercepts order and they may have some logic there to automatically cross against firm.”
On 6/20/2012 3:10 AM, Bin TAN (Victor) wrote:
See job spec below about “internalization”. Is there non-trivial business logic about that in your system? I guess if a client places a limit buy order and the internal best offer is better than the exchange best offer then do it internally. Is it that simple or there are hidden complications.
Not sure about market orders but I guess if the internal best offer is better than the exchange best offer then obvious…