trader
What exactly do BB Traders do? From what I have read there are agency traders (those who simply execute orders for clients to minimize the impact of large orders) and prop traders (which seems to be a dying breed in BB's). With the prop traders dying out, what exactly do traders do besides agency trading. I always see people talking about market making, flow trading, etc. so what exactly do these functions entail?
Flow traders also profit off of bid/ask spreads while simultaneously trading on behalf of clients, the following situation would not be uncommon at a BB trading desk:
-Pension Fund would like to sell $100 worth of MBS
-BB trader takes the MBS and calls up another bank or pension fund to see if they would like to purchase them
-BB trader finds a buyer and sells the MBS for $150
-Trader pockets the $50 difference as a profit and returns $100 minus commission back to the customer.
So do flow traders actually have to follow the markets closely since they are just selling a clients order for more than their ask?
Good response
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