Internalization
a.k.a. Internalisation, B-booking
When a broker or bank matches client orders against each other or its own book instead of sending them to…
In plain English
When a broker or bank matches client orders against each other or its own book instead of sending them to the outside market.
With internalization, a dealer that receives a buy order from one client and a sell order from another can simply match them in-house, saving costs. It can also hold the risk itself.
Big banks internalise a large share of their FX flow. For retail brokers, it is part of the 'B-book' model, where the broker is your counterparty.
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