when a client places an order with their broker to buy certain shares of stock the broker has to get those shares from somewhere to fill the order such an order completed for an investor using shares in the broker s inventory is referred to as internalization 
this internalized trading is often less expensive than the alternatives mentioned above as it is not necessary to work with an outside firm to complete the transaction moreover brokerage firms that internalize securities orders can also make money off the spread the difference between what they purchased shares for and what they sell them to the investor for additionally because such share sales are not conducted on the open market the brokerage firm is less likely to influence prices if it sells a large portion of its own shares internal sourcinginternal sourcing refers to the internalization process of acquiring any needed asset service or material from within a business instead of from an external source this commonly refers to a business s decision to produce goods internally instead of retaining an outside supplier internal sourcing can also refer to the hiring practice where preference is given to current employees when recruiting for a vacancy it can also involve keeping certain business activities within the business structure such as marketing activities a business also may work to keep its financing source internalized for example it may focus on reinvesting certain assets in the business instead of seeking financing by borrowing or getting new investors 