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Internalization
When you place an order to buy or sell a stock, your broker has choices on where to execute your order. Instead of routing your order to a market or market-makers for execution, your broker may fill the order from the firm's own inventory. This is called "internalization." In this way, your broker's firm may make money on the "spread" which is the difference between the purchase price and the sale price. To learn more about the basics of trade execution including order routing, payment for order flow, and internalization you should read Trade Execution: What Every Investor Should Know.
http://www.sec.gov/answers/internalization.htm
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