Back to Finance Glossary | Previous PageProprietary trading is when an investment bank's traders actively trade stocks, bonds, derivatives or other financial instruments on its own account rather than its customers'.
By managing the risk of these exposures, an investment bank can make a profit.
The proprietary trading desk, or prop desk, can use a variety of strategies such as index arbitrage, statistical arbitrage, merger arbitrage, fundamental analysis, volatility arbitrage or global macro trading, to engage in trading.
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August 15, 2010 | Adam Fish
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