Question: ABC hedge fund is a major market maker in certain securities and is also a proprietary trader in its distressed debt business. What is the

ABC hedge fund is a major market maker in certain securities and is also a proprietary trader in its distressed debt business. What is the difference between the two roles? Why can ABC hedge fund operate in both roles but Big Bank which accepts Federal Deposit Insurance Corporation (FDIC) insured deposits cannot? What federal regulation governs Big Bank's ability to participate in these roles?

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The primary difference between being a market maker and engaging in proprietary trading lies in the nature of the activities and the motivations behind them 1 Market Maker Role A market maker is a fir... View full answer

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