That’s not what the word counterparty means. You’re thinking “internalization.” An internalizer is not a counterparty to the position (“I think you will lose mo

That’s not what the word counterparty means. You’re thinking “internalization.” An internalizer is not a counterparty to the position (“I think you will lose money”) they are a counterparty to the order (“I have extreme confidence that you are not secretly running Goldman Sachs from that eTrade account and so your sale of 2 shares of Google is unlikely to be based on a material edge, and therefore I am happy to make you a market in Google at a tight spread and indeed at a price better than any market covered by Reg NMS, whereas I would not make this offer to someone I knew to be Goldman Sachs because they would gouge my eyeballs out. I express no opinion as to whether you make or lose money on this position; I’m ambivalent as to whether you’re selling these shares because you’re unwisely timing the markets, because your daughter needs braces, or because you spent three hours reading their 10-K; none of these constitute edge and none of them mean I am unlikely to successfully make markets on many hundreds of thousands of similarly situated trades with an average hold time denominated in milliseconds.”)