Statement of meaning of ‘Inverted Exchange’
A stock exchange where the broker initiating the barter collects a profit from the exchange instead of the market maker reach it.
BREAKING DOWN ‘Inverted Exchange’
If a certain investor wants to buy 100 divide ups of XYZ stock at the lowest quoted price, a traditional exchange would obligation the broker initiating the trade about 30 cents and would pay the superstore maker, the firm that is continually posting buy and sell orders electronically, around 22 cents.
An inverted interchange flips the model upside down, using what is called a taker-maker version. If that same order went to an inverted exchange, the broker initiating the marketing would collect around 10 cents and the market maker longing pay a fee of around 18 cents. Nasdaq BX and Bats BYX are two examples of inverted the boards.
An inverted exchange encourages brokers to route the trade to an exchange where they can manufacture more profit on the trade. Some critics say that it may cause stockjobbers to not capture the best trading price for their clients because of the graft they receive from some exchanges, but not all.