y commercial banks also have trading systems

I just had a clue to this question.

In general, broker-dealers do trading; Investment banks raise money for clients; commercial banks lend money. (In reality, every investment bank also has a substantial broker/dealer operation, as the money-raising is done on the so-called “capital market”.)

So why do commercial banks (excluding the conglomerate universal banks) need trading systems? This is what I guess —

A commercial bank tries to provide a full service to its big clients. BoA (before merging with ML) was a traditional commercial bank but it also maintained client accounts holding fixed income and equities assets. To provide a more complete service, BoA also provided hedging, risk measurement and other services, making it a partial trading system.

However, I feel this partial trading system was probably not designed to make money for the trader. This partial trading system was more of an extension of the position system or inventory system.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s