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Dealer

• Is an organization which transacts trades on the behalf of its proprietary account. This activity is opposed to a broker which transacts trades for the account of its customer. The dealer is usually compensated by the spread.

• A dealer, as opposed to a broker, acts as a principal in security transactions, selling securities from, and buying securities for, its own position.

• An entity that stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price).

• A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account.

 
 Embedded terms in definition
 Ask price
Ask
Bid price
Bid
Broker
Buy
Its
Position
Principal
Securities
Security
Sell
Spread
 
 Referenced Terms
 Agent: The decision-maker in a principal-agent relationship.Is a party who acts on the behalf of another. This occurs when a broker executes a trade for the benefit of the customer. Here, the broker receives a commission. This compares to a Dealer transaction. See Broker-Dealer.A firm that executes orders for or otherwise acts on behalf of another (the principal) and is subject to its control and authority. The agent may receive a fee or commission.

 Ask price: A Dealer's price to sell a security; also called the offer price.This is the price Dealers are willing to sell securities at. This is typically higher than the price dealers are willing to buy securities (called bid price). The difference between the ask and bid prices is called the bid-ask spread and represents the profit to the dealer for supplying immediate execution services.See Ask.

 Away: A trade, quote, or market that does not originate with the Dealer in question, for example, "the bid is 98 10 away (from me)."A trade, quote, or market that does not originate with the Dealer in question, e.g., the bid is 98-10 away from me.

 Away: A trade, quote, or market that does not originate with the Dealer in question, for example, "the bid is 98 10 away (from me)."A trade, quote, or market that does not originate with the Dealer in question, e.g., the bid is 98-10 away from me.

 Bid: The price at which a buyer offers to buy a security.The price the Dealer offers to buy securities. The bid price is typically lower the ask price which represents the dealer s selling price.An indication by an investor, a trader or a Dealer of a willingness to buy a security or commodity. The price at which an investor can sell to a broker-dealer. The quoted bid is the price at which a Market Maker is willing to buy a stock. See also: Best Bid; Quotation.Is the price that a buyer is willing to pay.

 
 Related Terms
 Broker dealer
Dealer loan
Dealer market
Dealer options
Foreign exchange dealer
Government security dealer
Odd lot dealer
Primary dealer
Regional dealer

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