Definition of Broker Dealer

A person or firm who buys and sell securities for their own account and for the accounts of others. When acting as a broker or agent for a customer they are merely executing the customer’s order and charging them a fee known as a commission. When acting as a dealer or principal they are trading for their own account and participating in the customer’s transaction by taking the other side of the trade and charging the customer a markup or mark down. A firm also is acting as a principal or dealer when it is trading for its own account and making markets in OTC securities.

Applying "Broker Dealer" to Securities Exams:

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