Flow trading

In finance, flow trading occurs when a firm trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments, with funds from a client, rather than its own funds.^[1]

A stock trading desk

Flow trading can be a significant source of profits for investment banks.^[2][3] Engaging in flow trading can also boost a firm's own proprietary trading profits via access to information on client activities. Additionally, the firm can often facilitate client trades by serving as the counterparty, thus profiting from the bid–offer spread.^[3][4]

In 2011, the Volcker Rule aimed to limit flow trading businesses from taking proprietary bets.^[5]