I used to think just def <a href="http://www.elitetrader.com/vb/search.php?s=&action=showresults&searchid=4097343&sortby=lastpost&sortorder=descending">promoted</a> a rogue interpretation of internalization. Then I listened to IB's CEO decry internalization earlier this year: We are able to achieve these metrics because instead of internalizing our customers orders or selling them to others who internalize them we subject our orders to our best execution router which we continue to modify and upgrade as different exchange systems and dark pools come along. This is an area that has been gaining more attention in the recent past and whenever I have an opportunity I urge people to look at their brokerâs SEC 606 reports, posted on the web, to see where their orders end up. http://seekingalpha.com/article/320...sses-q4-2011-results-earnings-call-transcript Can anyone explain why the IB / Timber Hill arrangement does not qualify as internalization? Read more here: http://www.sec.gov/news/studies/ordpay.htm#PAYMENT Typically, firms that internalize customer equity orders automatically execute customer orders at the national best bid or offer irrespective of their own quotations. This practice is referred to as price matching. In the options markets, internalization takes on many forms, none of which allow a dealer to exclusively interact with customer order flow without subjecting the customer orders to competition from other market participants.
I imagine that Form 1099-Bs from Penson for so many brokerage firms will be a big problem for 2012 tax reporting. Better keep great records and get your downloads while you can.