| Bucket Shop |
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There
are two definitions for a bucket shop:
1) A fraudulent brokerage firm usually not listed on a stock exchange
that uses aggressive telephone sales tactics to sell securities
that the brokerage may own and wants to get rid of. The securities
that they sell are typically poor investment opportunities, almost
always penny stocks.
2) A brokerage which makes trades on a clients behalf promising
the customer a certain price, but waits until a price discrepancy
arises and then makes the trade, while keeping the difference as
profit.
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1)
Bucket shops are sometimes called the boiler room. The US has laws
restricting bucket shop practices by limiting the ability of brokerage
houses to create and trade certain types of over-the-counter securities.
2) The second definition for a bucket shop comes from over 50 years
ago, when bucket shops would do trades all day long, (throwing the
ticket into the bucket), then they would decide at the end of the
day which account to award the winning and losing trades. |
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Dictionary
