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Proprietary Trading and the Volcker Rule

Wall Street Mechanics — The Insider Curriculum • Beginner Investing • 7 min

Before 2010, the line between a bank trading for clients and one trading purely for its own profit was much blurrier than it is today. Proprietary trading, or "prop trading," refers specifically to the second category: a bank using its own capital to make a profit for itself. This is different from facilitating client trades or providing market-making liquidity, which we’ll cover elsewhere in this module.The Volcker…

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