internal market

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Related to Internal markets: Single market

internal market

A “market” created within an organisation to drive exchanges of services and competition that would (theoretically) lower prices. The Thatcher (Conservative) government created an internal market system in the NHS in 1990, which pitted the purchasers (GP fund-holders) against the providers (Trusts), to promote competition between providers.
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When expressing their expectations for the coming term of Charlie McCreevy as Internal Market Commissioner under the new European Commission President Jose Manuel Barroso, most European policymakers, financial executives, regulators, accountants, and corporate lawyers hedge their bets--in several respects.
Naturally, the brave new world of computerized internal markets will incur the same drawbacks as external markets--complex working relationships fraught with risks, uncertainty, and other disorders.
Some organizations fear that internal markets will create much conflict as separate units pursue different goals and compete for resources.
Even the troublesome aspects of internal markets often represent useful adjustments or signs that adjustments are needed.
Internal markets seem inevitable because they offer the only feasible way to manage the growing complexity of modern society.
Internal markets offer advantages that are useful for most institutions, but we should hold no illusions that internal markets represent a universal ideal or panacea that should be applied in an all-encompassing way Markets may not be useful in certain situations, such as military operations and space launches that demand the close coordination of thousands of people and complex plans.
While the internal markets are not a new concept, they are drawing increased attention recently as new external crossing entrants have emerged to provide ready liquidity, potential price improvement and controlled information leakage - which in turn are siphoning off order flow from traditional markets and brokers.
However, as the size of trades continues to decrease and decimalization makes it more difficult to find large liquidity, the attributes that attracted institutional and hedge fund flows to the external crossing networks - ready liquidity, potential price improvement and controlled information leakage - are now attracting the buy-side to the broker's internal markets.
The development of the internal market is one of the solutions being pursued to answer this question.
Brokers who do not aggressively offer improved execution will fail to attract additional order flow and ultimately will be unsuccessful in their efforts to create an internal market due to lack of participation.
We believe that the development of a robust internal market strategy is essential to managing profitability as commissions continue their march toward zero," said Larry Tabb, CEO at TABB Group.

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