Proprietary trading


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Proprietary trading

Principal trading in which firm seeks direct gain rather than commission dollars.

Proprietary Trading

The act or practice of an investment bank conducting trades on its own account, rather than on behalf of a client. Proprietary trading has three primary benefits. First, it allows the investment bank to profit on its own instead of simply collecting commissions and fees from clients. Secondly, it lets the bank build an inventory of securities. This can be useful if a client places an order for the securities in an illiquid market. In such a situation, the investment bank can fill the order from its own inventory. Finally, proprietary trading allows the bank to make a market when it is assigned to ensure the liquidity for a given security.
References in periodicals archive ?
The impending closure of proprietary trading desks in the US has left a large pool of talent looking for an opportunity and Asia is where the lights are shining brightest.
said Thursday it bolstered group net profit for the April-June quarter 90.6% from a year before to 11.03 billion yen due chiefly to the surge in its proprietary trading gains from its bond and foreign exchange transactions.
Nine members of Goldman Sachs' proprietary trading group, led by Bob Howard, were hired to enhance the company's product offerings.
According to the company FlexTRADER and Mottai share the same backend with FlexTRADER handling Phatra's market making and proprietary trading requirements, including pairs trading and index arbitrage, while Mottai facilitates web-based trading functionality and mobility to the remisier and the retail dealing audience.
These rating strengths are partially offset by volatility in INFINA's earnings given its high correlation with equity markets, and the company's exposure to risks inherent in the securities-based lending and proprietary trading businesses.
The company is expecting more opportunities because of the Volcker rule that bars banks from conducting their own proprietary trading activities.
Capital adequacy proposals in a new Financial Services Authority (FSA) discussion paper on banks' proprietary trading risks could increase execution costs for their institutional investor clients.
Nikko Cordial attributed the pretax profit surge to a 390% climb in gains on its proprietary trading related to such transactions as those in exchange-traded funds to 50.1 billion yen.
The firm said that it has hired Pierre-Henri Flamand, a former head of proprietary trading at Goldman Sachs.
JPMorgan Chase & Co (NYSE: JPM) is planning to move its proprietary trading personnel to its asset management business in the coming years, and set up an alternative investment management group for the bank's clients, Dow Jones has reported, citing a separate online report by Dealbreaker.
It banned deposit taking institutions from proprietary trading and prohibited banks from investing more than 3% of their capital in hedge funds and private equity firms.
The company is engaged in retail equity broking, arbitrage trading, proprietary trading and distribution of financial products.