What does "B" book mean?

For proprietary trading firms, "B" book trading typically refers to a model where the firm takes the opposite side of its traders' positions. In this setup, the firm essentially acts as a counter-party to its traders' trades, rather than passing those trades directly to the market. This allows the firm to profit from traders' losses and manage its own risk exposure more directly. However, it can also create conflicts of interest between the firm and its traders, as the firm's profits may come at the expense of its traders' performance. We (VST) switched to operate on a "A" book model, where traders' orders are executed directly in the market, to mitigate such conflicts and align incentives more closely.