What is Broker-Dealer? Definition and Example
What is Broker Dealer?There are several parties involved in the business of marketable financial assets or securities. One party that is involved in such business is broker dealer. Broker dealer holds an important spot in financial marketplace. The involvements in security trading business take form of purchasing and selling assets. Financial assets that broker dealer manages include banknotes, stock, and derivatives.
Broker Dealer DefinitionBroker dealer is a party (can be a person or a financial institution) involved in asset trading that conduct transaction of selling or purchasing the financial assets or securities. When the transaction is conduct on behalf of their own, the party is called dealer or principal. Meanwhile, when someone or a firm buys or sells securities for client, you can call them a broker or agent. One person or firm cannot be both broker and dealer in the same transaction.
In order to be able doing their job, a broker dealer needs to be registered in government’s database. The agency that deals with broker dealer is Securities and Exchange Commission or other similar types of agencies. Without license from related government agency, they cannot conduct the job legally.