Proprietary trading
{{Short description|Practice of trading financial instruments using a firm's own money}}
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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.{{cite news |url=https://www.theguardian.com/business/2010/jan/21/proprietary-trading-wall-street-banks |title=What is 'proprietary trading'? |newspaper=The Guardian |author=Heather Stewart |date=21 January 2010}}
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.{{cite web |url=https://www.daytradetheworld.com/trading-blog/proprietary-trading-your-complete-guide/ |title=Proprietary Trading: What It Is & Related Trading Firms |date=28 September 2020 |publisher=DayTradeTheWorld}}
Famous traders
Trader Nick Leeson took down Barings Bank with unauthorized proprietary positions. UBS trader Kweku Adoboli lost $2.3 billion of the bank's money and was convicted for his actions.{{cite news |last1=dzawu |first1=moses |title=After Losing $2.3 Billion at UBS He Now Seeks Redemption in Ghanaian Bonds |url=https://www.bloomberg.com/news/articles/2020-01-22/fallen-ubs-trader-adoboli-seeks-redemption-in-bond-market-deals |newspaper=Bloomberg.com |date=22 January 2020}}{{cite news |last1=dalton |first1=samantha |title=Kweku Adoboli: From 'rising star' to rogue trader |work=BBC News |date=20 November 2012 |url=https://www.bbc.com/news/uk-19660659}}
Armin S, a German private trader, sued BNP Paribas for 152m EUR because they sold to him structured products for 108 EUR each which were worth 54 00 EUR.{{Cite web |url=https://www.ft.com/content/a9e8b574-22f0-11e8-ae48-60d3531b7d11 |title=BNP failed to book traders in Germany for a week |last=Binham |first=Caroline |date=2018-12-20 |website=Financial Times}}
Notable proprietary trading firms
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- 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
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