Dealing Desk

What Is a Dealing Desk?

A dealing desk is where market creators execute and trade financial instruments like forex, equities, options, commodities, and other financial assets.

Grasping Dealing Desks

In foreign currency markets, a dealing desk is where the forex dealers at a bank or financial institution sit. Since the forex market is open around the clock, numerous institutions have dealing desks around the world. Dealing desks can likewise be found outside the [foreign exchange markets](/foreign-exchange-markets, for example, in banks and finance companies, to execute trades in securities and other financial products. Dealing desks are not limited to forex. They execute numerous financial assets like equities, ETFs, options, and commodities.

The term "desk" might be a bit of a misnomer, given its undertone of a table shared by two or three traders. Large financial institutions frequently have dealing facilities that are staffed by numerous dealers and market producers. In a large organization, major currencies, for example, the euro and yen, may have numerous trading desks staffed a modest bunch of traders who spend significant time in these currencies.

Also, on the off chance that the institution bargains in equities, ETFs, options, and commodities, every one of these assets will generally have its own dealing desk of traders.

The dealers are there to work with trades for the benefit of their customers. They might act as the principal or the agent. While acting as principal the dealer takes the opposite side of the client's trade. The dealer could be facing risk challenges such a transaction or dealing out of their own inventory. While acting as an agent, the trader will handle a client's order by finding liquidity in the secondary market. In this case, the client will receive similar prices executed by the dealer.

As a result of electronic trading, the number of forex dealers at a desk has declined essentially since the mid-2000s. In the late 1990s, a dealing desk could be comprised of 15 to 20 traders, with frequently different individuals covering a similar currency.

Nonetheless, today, your normal forex desk will have under ten traders, some as not many as five with a ton of the business being quoted and cleared by an electronic auto-supporting platform. The equivalent can be said for equities and ETFs. Large numbers of the manual processes have been automated due to the rise of electronic trading.

By and large, the dealing desk is situated next to the sales desk and much of the time close to the market risk desk that screens positions and will flag any risk with current trades or positions. The market risk team is searching for irregularities and will calculate the value at risk (VAR) toward the finish of every day to evaluate the size of the risk that the bank has at some random time.

Features

• While acting as the agent, the trader will handle a client's order by finding liquidity in the secondary market and the client will receive similar prices executed by the dealer.
• The dealers are there to work with trades for the benefit of their customers and may act as the principal or the agent.
• While acting as principal the dealer takes the opposite side of the client's trade.
• A dealing desk is where market producers execute and trade financial instruments like forex, equities, options, commodities, and other financial assets.