Business, Legal & Accounting Glossary
A Broker-dealer typically is a securities trading firm which combines the functions of a stockbroker – acting as an agent for investors – with that of a dealer – acting as a principal for its own account. This so-called dual capacity became a feature of the London stock market only after Big Bang in 1986.
A broker/dealer is an individual or a firm which is legally entitled to buy and sell securities for itself as well as for others. A broker/dealer must be registered with the Securities and Exchange Commission. When acting as a broker a broker/dealer buys and sells securities on behalf of clients. When acting in the capacity of a dealer a broker/dealer buys and sells on behalf of his or her own firm. Securities held by a broker/dealer in the dealer’s own account may be offered to clients and others. For this reason, some investors refuse to blindly accept the buy or sell advice of a broker/dealer since there is the potential for a conflict of interest if the broker/dealer is selling securities to the client from their own dealer account.
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This glossary post was last updated: 15th February, 2020 | 1 Views.