What is a trading house?

• A. A broker that only executes client orders.
• B. An institution that trades financial products for its own account, often using sophisticated trading strategies.
• C. A government-owned bank.
• D. A retail store for commodities.

Answer: (B)

A trading house is a firm that trades financial instruments for its own account using its own capital. It engages in proprietary trading, market making, arbitrage, and other strategies to profit from price moves or to provide liquidity, rather than primarily acting on behalf of clients. This is why the description fits better: the focus is on trading with the firm’s own money and using sophisticated strategies. In contrast, a broker mainly executes client orders and doesn’t typically commit substantial capital to trades, a government-owned bank isn’t inherently defined by proprietary trading, and a retail store for commodities deals with physical goods rather than financial market trading.