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Any person, other than a bank, engaged in the business of buying or selling securities on its own behalf or for others. See: Dealer.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


A person or, more often, a firm that acts as a broker for some transactions and a dealer for others. That is, as a broker, he/she conducts transactions on behalf of clients, and, as a dealer, he/she trades on his/her own account. In practice, most brokerages are in fact broker-dealer firms. Most broker-dealers must register with the SEC.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A firm that functions both as a broker by bringing buyers and sellers together and as a dealer by taking positions of its own in selected securities. Many firms that are commonly called brokers or brokerage firms are actually broker-dealers.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


A broker-dealer (B/D) is a license granted by the Securities and Exchange Commission (SEC) that entitles the licensee to buy and sell securities for its clients' accounts. The firm may also act as principal, or dealer, trading securities for its own inventory.

Some broker-dealers act in both capacities, depending on the circumstances of the trade or the type of security being traded. For example, your order to purchase a particular security might be filled from the firm's inventory.

That's perfectly legal, though you must be notified that it has occurred. B/Ds range in size from independent one-person offices to large brokerage firms.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
For advisors choosing a country club type of broker dealer, it's a statement that their broker dealer is an extension of their BMW 328i and other things in their life that are high-end and exclusive.
He explained, "Jon, I really prefer the smaller broker dealer, but the larger firm has been recruiting numerous advisors while the smaller firm doesn't add that many."
As an advisor, give yourself the operating room to act like a broker dealer. Make your successes in attracting new clients known, and feel free to express the advantages of working with you.
Industry publications announced regular movement to broker dealers, touting the group's assets and discussing why they moved to whatever firm they had ultimately chosen.
Recruiting has been impacted to a degree, primarily in the form of recruiter layoffs at several broker dealers.
This is because broker dealers have numerous profit centers in assets being held in brokerage accounts, but these assets are held away from brokerage accounts--and hence the low profit.
Insurance-owned broker dealers are rarely profitable endeavors and if they do manage to be profitable it is most always marginal, so when the parent company's primary profit center (annuity products) is compromised, these BDs resort to cost cutting and/or consolidation.
(I discussed this earlier in "The The Decline of Insurance Owned Broker Dealers.")
An advisor at another high-consolidation model broker dealer shared with us how he used to invite all the operations people out to a Christmas dinner at a nice restaurant near the home office.
We have yet to hear an advisor tout an improvement in their broker dealer experience through extensive back office consolidation.
The firm also provides execution and clearing solutions for other broker dealers.
Many broker dealers pocket 12b-1 fees as part of their profit center, while some credit 12b-1 fees back to the client.