Dealer's spread

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Dealer's spread

Dealer's Spread

The amount a dealer earns by buying a security and then selling it to an investor. The dealer's spread is the difference between the dealer's purchase price and his/her sale price. The dealer's spread is how dealers (other than broker-dealers) make most of their profits.
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Onyx Acceptance Corporation announced that San Diego Superior Court Judge Charles Hayes issued a decision after a three-week bench trial that vindicates the common practice of finance companies paying a dealer spread, also known as "dealer participation", to originating motor vehicle dealers in connection with the assignment of installment sale contracts.
Under the quoting convention, stocks with a dealer spread of 3/4 point or greater are quoted in even-eighths (quarters).
Q: And again, is that, in your professional opinion, because those market makers had three-quarter point dealer spreads and did not want to enter what were termed "unprofessional markets"?
In contrast to previous research, they find that inside dealer spreads narrow throughout the trading day, especially near the close.
Furthermore, Hamilton |21~ shows that market spreads and modal dealer spreads have similar cross-sectional properties.