Proprietary Day Traders and Their Performance at Bursa Malaysia

Abstract

Proprietary trading has gained much attention in the emerging markets such as Malaysia in the recent years. However, there is a lack of studies for emerging markets that can provide a clear picture on the performance of the proprietary traders and factors that determine their success. Little research has been done in this area mainly due to data constraints. This study employed a set of self-collected data from a major investment bank in Malaysia and traced the daily performance of the traders from Oct 2016 – Jan 2017. The demographic backgrounds of the proprietary stock traders are studied to shed lights on the traits and factors required to make consistent profits. Approximately 50% of the day traders in our sample were profitable and earning more than RM5000 a month with some top performance gaining an average of more than RM200000 per month. The study found that the determining factor for profitability is not so much on the background of the candidates but more on the capital provided to the traders and also their years of service with the bank. The study also reveals that the more seasoned traders who get more capital from the investment banks will have more opportunity to make more profitable income.

Keywords: Proprietary Trading, Day Traders, Bursa Malaysia, Consistent Profits, Traders’ Demographic Profile, Trading Credit

JEL Classification: G20, G10