What rules must your broker follow when buying/selling shares for you at the market price?
When you buy/sell shares at market price (not using limits), what rules must your broker follow?
Two scenarios:
You tell your broker to sell shares at market price. The broker buys the shares immediately, waits a few hours, and then sells to you at the highest price that occurred since you purchased the stock.
Two people with the same broker are posting a buy and sell for market price at the same time. The broker takes the sellers stocks and sells them to the buyer. Could the market price for the buyer be different from the market price for the seller?
Are these considered ethical or legal? What are some readable sources that outline the rules that brokers must follow?
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Neither.
Market orders are executed immediately (assuming there's a sell/buy pair of orders that can be matched), and the matching between the buyer and the seller is done by the exchange, not the broker. The sell price for the seller is the buy price for the buyer, always (for stocks).
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