1 / 3

Proprietary Trading

Proprietary trading (http://manishhathiramani.com/about) books may worth 100-800 crore INR and the profitability of this segment has prompted several brokers to stop running conventional business models. You will find most stock broking firms housed in the BSE towers surviving doing proprietary trading. These are brokers who did not embrace the more modern business models. When retail investors stopped investing post 2008 crash, these brokers had no option but to trade for themselves. The advent of a large number of retail brokers with online capabilities, low retail investor participation, regulatory tangles and higher investor servicing cost have prompted brokers to rely more on proprietary trading.

manishhathiramani
Télécharger la présentation

Proprietary Trading

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Proprietary Trading Firms You will find most stock broking firms housed in the BSE towers surviving doing proprietary trading firms. These are brokers who did not embrace the more modern business models. When retail investors stopped investing post 2008 crash, these brokers had no option but to trade for themselves. The advent of a large number of retail brokers with online capabilities, low retail investor participation, regulatory tangles and higher investor servicing cost have prompted brokers to rely more on proprietary trading. Easier bank funding, although enjoyed by a few, has also encouraged brokers to enlarge their proprietary books.

  2. Proprietary Trading Why brokerages prefer proprietary trading over winning new clients. Those days do not exist anymore. This is the world of mass-retail and many brokers are not really learned this business model. Nowadays running successful mass-retail offline models is rare and difficult. The offline delivery models are very risky because the more clients you have the more losses you make. Many share trading firms are focusing more on HNI and wealth clients these days. Many have opened a proprietary trading book and running an active proprietary desk and generating 25% of their overall revenues. Thousands of brokers have started proprietary trading to survive a highly competitive business.

  3. Online Share Market Experts say that client business comes only with high valuation charisma and as a larger number of retail clients gave you better valuation; this encouraged brokers to maintain large retail bases - often losing their revenues. Conventional brokers have strengthened our proprietary business which has become the bread and butter for most brokers. Trading profits through prop trading flows in all the time and a proprietary book could be used for trading or for making investments. A good number of brokers, however, still rule the markets using index options. Many big brokers such still have over 10% of their revenues from proprietary trading. Smaller brokers earn 40 - 60% of their revenues by online share market using the modern business model.

More Related