Proprietary trading

Trading by a financial institution on its own behalf, rather than acting primarily as an intermediary.

It is potentially highly profitable, but also risky.

Prudential regulations restrict the amount of proprietary trading that banks are allowed to do, in order to reduce the risk.

Sometimes abbreviated to 'prop' trading.

See also

• Bank
• Capital
• Commercial bank
• Investment bank
• Merchant bank
• Primary market
• Proprietary
• Prudential
• Secondary market
• Security