Any person, other than a bank, engaged in the business ofbuyingor sellingsecuritieson its own behalf or for others. See:Dealer.A person or, more often, a firm that acts as abrokerfor sometransactionsand adealerfor others. That is, as a broker, he/she conducts transactions on behalf of clients, and, as a dealer, he/shetradeson his/her own account. In practice, most brokerages are in fact broker-dealer firms. Most broker-dealers must register with theSEC.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
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 firms inventory.
Thats 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.
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