Interpositioning

Interpositioning

Definition

Prohibited practice of putting an unnecessary broker-dealer between the customer and the best available market price. Interpositioning occurs when there are matching buy and sell orders but, instead of executing the orders against each other, the market maker fulfills the customer’s sell order by purchasing for his firm’s proprietary account and then fills the customer’s buy order by selling from the proprietary account at a higher price, or fulfills the customer’s buy order by selling stock from the proprietary account and then filling the customer’s sell order by buying for the proprietary account at a lower price, enabling his firm to profit from the spread.

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