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] 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.