Definition of Delta One

Delta One involves banks trading securities that track an underlying asset as closely as possible, which means it is often associated with exchange traded funds (ETFs) and swaps. Delta One desks at banks can cover a range of asset classes – everything from currencies to equities and commodities.

In some cases, banks are known to deploy high-frequency trading technology and algorithms to make money from tiny deviations in product and asset values.

In practice, the business sits in a unique position between trading for clients and so-called proprietary trading – or trading for a bank’s own account. Some have even described the business as “flow-prop,” referring to ‘flow’ from clients and proprietary trading. That’s because while Delta One practitioners may be committed to tracking the underlying assets as closely as possible for their clients, they retain a degree of flexibility in how that’s achieved. [1]


‘Delta One’ forced out of the shadows

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