Trading Book

What is Trading Book?

Trading book is the type of book maintained by the bank, financial institution or a stockbroker banks for recording the transactions of the clients who have given them an opportunity to act as the broker or middle person for dealing in securities. This book helps portfolio managers in calculating for brokerage or their fees or percentage of profit as decided between client and portfolio managers.


For each client, the separate trading books are to be maintained by the portfolio managersPortfolio ManagersA portfolio manager is a financial market expert who strategically designs investment more to help them in various compliance and maintaining the transparent records for each client. It also helps in solving any problem if it arises and makes the accounts and understanding simpler. These books are maintained to record the transactions so that there shouldn’t be any problem or confusion in the future between clients and portfolio managers.


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Example of Trading Book

ABC Bank maintains the D-mat accounts of the clients or investors. Mr. A regularly deals in various securities. The details of various securities dealt with by Mr. A is as under:

Trading Book Example 1

Prepare this book, which is to be maintained by the bank, and also state how it is useful for Mr. A?


The trading Book of Mr. A is as under:

Trading Book Example 1.1

Trading Book is useful for Mr. A in the following ways:

  • It helps to view the records of the transactions done by Mr. A.
  • A can access the record of transactions at any time.
  • This book helps Mr. A to view profit or loss on the transactions made.
  • It also helps with planning.

Effects of Trading Book

  1. With the help of this book, the responsibility and liability of the client and investor can be fixed as the client can verify the transaction he has done, and the bank to maintain the records and to verify whether payment credited or debited as the case may be to the exchange’s account.
  2. They also help to verify the purpose of trading by the client. If the purpose is unlawful, the portfolio managers can warn the client and accordingly report to the authorities.
  3. With this book, the responsibility of maintaining records is shifted from an investor to portfolio managers.
  4. The trading books can be used as the legal evidence in the court of law, and it is termed and recognized as the legal documents.
  5. It is also recognized as an accounting book that contains all the financial records of the portfolio managers.
  6. The burden of investors is reduced as they do not have to maintain every record of the transactions. As the records are maintained by the Portfolio managers, who also helps in calculating the tax liability.
  7. Past transactions can be accessible in a fraction of time, which helps both the portfolio managers and the investors in the smooth conduct of the transactions.


  • Trading Book helps in planning the transactions to earn the maximum profits and to prevent unnecessary losses.
  • This book helps to track and view the record of transactions.
  • It is accepted as legal proof in a court of law and considered a legal document.
  • It helps to minimize the risk by fixing the responsibility of maintaining the records and tracking the records.
  • With the help of these books, the fraud can be easily determined and prevented by reporting to the concerned authorities.
  • Each transaction entered into by client are maintained through this book.
  • With the help of this book, the brokerage calculations become easy by the portfolio managers.
  • They can also be recorded as accounting ledgersAccounting LedgersLedger in Accounting, also called the Second Book of Entry, is a book that summarizes all the journal entries in the form of debits & credits to use for future reference & create financial statements. read more in books of accounts.
  • Portfolio managers are responsible for maintaining the whole trading book of their institutions as well as a separate one for their clients, which helps them to maintain better and transparent records.
  • With the help of this book, past activities can be viewed easily.
  • It is a collection of several fiscal instruments that help in the smooth conduct of the business of portfolio managers.
  • The trading book helps the investor in planning the investment and effective utilization of resources and investment.


Trading Book is the type of book which is maintained by the portfolio managers to maintain the records of the transactions entered into by it as well as the clients. Two trading books are to be prepared by the portfolio managers; one is a consolidated book that contains all the records of all transactions entered into by portfolio managers, and the other is a separate book for each client. It is a legal document and accounting ledger also which can be presented as proof and can be accepted validly. With the help of this book, fraud can be detected from the nature of transactions, and it can be prevented. These books also help in financial planningFinancial PlanningFinancial planning is a structured approach to understanding your current and future financial goals and then taking the necessary measures to accomplish them. Because this does not begin and end in a specific time frame, it is referred to as an ongoing more and the optimum utilization of resources.

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