How the Trading Floor Really Works

Proprietary Desk Liquidity

From a market maker’s perspective, having a large active proprietary desk can be a valuable source of liquidity for hedging purposes. We will take the three examples from Chapter 4 and look at the possible involvement of a Megabank proprietary desk. In the PACAM treasury trade example (Figure 7.2), it’s unlikely that there would necessarily be any proprietary trading desk involvement. It is not a particularly large or difficult trade to transact. The proprietary desk could easily have called the treasury market maker with the exact same request. Note that the proprietary desk would not usually work through a treasury sales person. It would often have a direct relationship with the market makers with whom it wanted to ...