Jitney
Candlefocus EditorThe first type of jitney is one who relies on another broker to facilitate transactions. By doing this, a jitney can capitalize on the other broker's expertise and connections, allowing it to move in and out of markets quickly and efficiently, while avoiding the costs associated with setting up the infrastructure and personnel necessary to conduct its own trading. Jitneys also benefit from their partner's ability to access liquidity in hard-to-reach markets, such as those off-exchange.
The second type of jitney, however, has a much more nefarious purpose. This type refers to brokers that collude with one another to exploit their clients and other market participants. This type of collusion often takes the form of price manipulation and insider trading, allowing the brokers to generate profits at the expense of the investors and other traders that they are supposed to serve.
Although jitneys have been present in the financial industry for many years, recent advances in technology and the rise of automated algorithms have made it easier for rogue jitneys to engage in their illicit activities without detection. This has led to increased regulatory scrutiny, as authorities are eager to ensure that jitney activity does not threaten the integrity of the markets.
The term jitney has come to symbolize the often-unscrupulous behavior of some brokers, but it is important to remember that, out of necessity, many legitimate brokers also rely on jitney services. In the end, it is the responsibility of regulators, investors, and all financial market participants to remain vigilant and aware of the potential negative implications of unregulated jitney brokers.