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Dealer

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 28 Apr 2023

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Dealer

A dealer is a person or company that buys and sells securities for their own account, whether through a broker or otherwise. Dealers are typically market makers who help to facilitate trading by providing liquidity to the market. They are usually the ones who set the bid and ask prices for a security. Dealers may also act as intermediaries between buyers and sellers, and may even take on the risk of holding a security for a period of time in order to facilitate a transaction.

History of the Term

The term “dealer” has been used in the financial industry since the late 19th century. It was first used to refer to a person or company that bought and sold securities for their own account. Over time, the term has come to encompass a variety of different activities, including market making, underwriting, and trading. Today, dealers are an integral part of the financial markets, providing liquidity and helping to facilitate trading.

Comparisons

Dealer Broker
Buys and sells securities for their own account Executes trades on behalf of clients
May act as a market maker Does not act as a market maker
May take on the risk of holding a security Does not take on the risk of holding a security

Summary

A dealer is a person or company that buys and sells securities for their own account, whether through a broker or otherwise. Dealers are typically market makers who help to facilitate trading by providing liquidity to the market. They are usually the ones who set the bid and ask prices for a security. For more information about dealers, you can visit websites such as Investopedia, The Balance, and the Securities and Exchange Commission.

See Also

  • Broker
  • Market Maker
  • Underwriter
  • Trader
  • Liquidity
  • Bid Price
  • Ask Price
  • Security
  • Intermediary
  • Risk

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