A German proprietary trading firm, Funded Unicorn, filed for bankruptcy, shaking the prop trading community and raising deeper questions about the sustainability of certain risk models.
Unique A-Book Strategy
According to a blog by proptraders, unlike most prop
trading firms that rely on challenge fees and operate largely on a simulated
trading basis, Funded Unicorn used what’s known as an “A-book” model. The firm
mirrored every trade made by its funded traders on the actual market.
In the A-Book model, a firm acts as the counterparty
to trades, ensuring a smooth flow of transactions without significant slippage.
On the other hand, a B-book model is a practice where instead of passing client
orders to the external market or liquidity providers (A-booking), a company
internalize these trades.
More about A-Book and B-Book Strategies: To A-Book or B-Book: The Review of the Two Decades
As of now, Funded Unicorn has reportedly not announced
any recovery plans or future restructuring. Clients are now left with questions
and an example of what can go wrong when ideals meet the unforgiving realities
of financial markets.
Expect ongoing updates as this story evolves.
A German proprietary trading firm, Funded Unicorn, filed for bankruptcy, shaking the prop trading community and raising deeper questions about the sustainability of certain risk models.
Unique A-Book Strategy
According to a blog by proptraders, unlike most prop
trading firms that rely on challenge fees and operate largely on a simulated
trading basis, Funded Unicorn used what’s known as an “A-book” model. The firm
mirrored every trade made by its funded traders on the actual market.
In the A-Book model, a firm acts as the counterparty
to trades, ensuring a smooth flow of transactions without significant slippage.
On the other hand, a B-book model is a practice where instead of passing client
orders to the external market or liquidity providers (A-booking), a company
internalize these trades.
More about A-Book and B-Book Strategies: To A-Book or B-Book: The Review of the Two Decades
As of now, Funded Unicorn has reportedly not announced
any recovery plans or future restructuring. Clients are now left with questions
and an example of what can go wrong when ideals meet the unforgiving realities
of financial markets.
Expect ongoing updates as this story evolves.
This post is originally published on FINANCEMAGNATES.
