Understanding Proprietary Traders in Equity Markets

Hard Equity Market Structure Market Participants

Investors often engage with different types of market participants who play various roles in equity markets. Understanding these roles is crucial for comprehending how market dynamics operate. One such participant type is the 'proprietary trader.'

Which of the following best describes the primary characteristic of proprietary traders compared to other market participants?

Proprietary traders primarily execute trades on behalf of clients to earn commissions.

Proprietary traders engage in buying and selling securities for their own accounts, seeking to profit from market fluctuations.

Proprietary traders provide liquidity to the market by taking positions solely based on client recommendations.

Hint

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