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Day-Trading Pioneer Shuts Prop Shop

Online brokerage giant E-Trade Financial Corp. recently closed its proprietary trading unit, a facility housing employees who traded for the firm's own account on the same platform provided to active trader clients. The move will allow the New York-based brokerage firm to focus on its agency trading services, removing the risk of conflicts inherent in trading for its own account.

The last trading day of the unit--comprising fewer than 50 traders--was Friday, May 7, and it closed formally on Monday, May 10, according to an E-Trade spokesperson. The firm's decision comes as active traders have suffered from several years of stagnant securities markets and increasing competition from hedge funds and other high-volume traders. The elimination of the unit also puts an end to questions from clients of its agency trading services, who may have harbored concerns about how well the firm could maintain the line between trading on behalf of clients and trading for its own account.

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