The practice where customer trades are executed internally within a brokerage or through intermediaries rather than through an exchange.
The brokerage keeps any money it may make on the spread (the difference between the purchase price and the sale price).
A reduction in the collateral needs of a broker, resulting from the presence of both long and short client positions.
Netting of transactions within a group of businesses, thereby reducing the number and cost of external transactions.
Also written 'internalization'.