I am not saying the mechanics allow front-running. It is just different from a dark pool or exchange in that the wholesaler guarantees execution and has some discretion over how to provide it. It&#x27;s not as if Schwab pings a bunch of internalizers to say &quot;hey, can you fill this at the NBBO?&quot; and then routes out themselves if nobody says yes. The wholesaler must fill the order whether they want it or not, and can either wear the delta, fill it from their own inventory, or execute in the market to facilitate the trade as riskless principal. The wholesaler gets contingent orders like stop market and stop limit orders and is responsible for executing them as well. It is more like having the retail broker outsource their execution similar to how a fund may have a bank desk execute orders on their behalf, except a bank desk usually has even more discretion over execution.<p>Hate to link to the Themis blog, but they cite the SEC here describing how internalizers, not retail brokerages, routed sell orders out to exchanges on May 6th: <a href="http:&#x2F;&#x2F;blog.themistrading.com&#x2F;2010&#x2F;10&#x2F;the-internalizers-and-the-flash-crash-let’s-talk-real-villains&#x2F;" rel="nofollow">http:&#x2F;&#x2F;blog.themistrading.com&#x2F;2010&#x2F;10&#x2F;the-internalizers-and-...</a>