penny jumping

A term that was created in the early 1990s when the stock exchanges changed the minimum size of their trading transactions to pennies from one-eighth of a cent. Penny jumping occurs, for example, when a specialist on the stock exchange sees that there is a buyer for shares of stock at $20. The specialist could then step in front of the order, or penny jump, and sell the shares to the buyer at $19.99 using shares in his or her own account. The specialist takes the trade away from the other seller.