In a dealer market, a broker brings together a buyer and a seller, but does not take on the role of principal in the transaction. Instead, the broker simply facilitates the transaction between the buyer and seller, and does not take on any risk.
The dealer market is the most common type of market for small investors, as it provides them with access to a wide range of securities. However, it is important to note that the broker does not provide any guidance or advice on which securities to buy or sell.
What is a dealer market?
A dealer market is a market in which traders, called dealers, act as principals in the transaction, rather than as agents. That is, they buy assets from, and sell assets to, other market participants, rather than matching orders.
The term is typically used in reference to financial markets, such as the bond market, where dealers trade with each other and with institutional investors, rather than on exchanges. Why is it called a broker? A broker is an individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.
The term "broker" comes from the Old French word "brouker" which means "trader" or "dealer".
What is the difference between a dealer and a market maker? A dealer is a person or company that buys and sells securities for their own account, whether through a broker or otherwise. A market maker is a person or company that quotes both a bid and an ask price for a security or other financial instrument, and is willing to buy or sell at those prices. Market makers provide liquidity to the markets by being willing to take the other side of a trade, even when there is no apparent counterparty. What is a dealer vs broker? A dealer is a person or company that buys and sells securities for their own account, whether through a broker or otherwise. A broker is a person or company that executes orders to buy or sell securities on behalf of their clients. In other words, a broker is an intermediary between a buyer and a seller.
Is Nasdaq a dealer market? Nasdaq is a dealer market, which means that dealers are responsible for matching orders from buyers and sellers. Orders are not matched directly between buyers and sellers, as they are in an exchange. Rather, each order is matched with another order from a different party through the dealer.