Proprietary Trading

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DEFINITION of 'Proprietary Trading'

When a firm trades for direct gain instead of commission dollars. Essentially, the firm has decided to profit from the market rather than from commissions from processing trades.

BREAKING DOWN 'Proprietary Trading'

Firms that engage in proprietary trading believe that they have a competitive advantage that will enable them to earn excess returns.

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RELATED FAQS
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    The Volcker Rule does not prevent commercial banks from offering trading services in hedge or private equity funds to their ... Read Full Answer >>
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