Proprietary trading
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Proprietary trading (also known as prop trading) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money (instead of using customer funds) to make a profit for itself.[1]
Proprietary traders may use a variety of strategies such as index arbitrage, statistical arbitrage, merger arbitrage, fundamental analysis, volatility arbitrage, or global macro trading, much like a hedge fund.[2]
Regulation
[edit | edit source]Following the 2008 financial crisis, some jurisdictions introduced restrictions on proprietary trading by banks. In the United States, the Volcker Rule limits deposit-taking institutions from engaging in certain types of prop trading. Independent proprietary trading firms, which do not take customer deposits, are generally not subject to these prohibitions.[3]
Notable proprietary trading firms
[edit | edit source]- Akuna Capital
- Citadel Securities
- DRW Trading Group
- Flow Traders
- Global Trading Systems
- Headlands Technologies
- Hudson River Trading
- IMC Financial Markets
- Jane Street Capital
- Jump Trading
- Optiver
- PEAK6
- Quantlab
- Radix Trading
- Susquehanna International Group
- Tibra
- Tower Research
- Tradebot
- TransMarket Group
- Virtu Financial
- XTX Markets
See also
[edit | edit source]References
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