Proprietary Trading

Proprietary Trading

Proprietary trading a.k.a. principal trading refers to trading by a financial institution (bank, trading firm, broker) on its own account and not on behalf of clients. This strategy uses the firm’s own capital to trade and the risk is borne exclusively by the firm. Since the global financial crisis, banks have largely been regulated away from engaging in proprietary trading to avoid conflict of interest and financial stability issues.

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