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What are broker dealers?
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11th Dec 2009 by Tom Lindmark
A broker dealer can refer to a lot of different functions but generally it's a term that is applied to securities dealers that stand ready to make a market in a security or securities. A good example are primary broker dealers in the U.S. These firms are the companies that are entitled to bid on Treasury securities whenever the U.S. government wants to issue bonds. They are required to bid on the securities and take that portion that they are awarded which they in turn sell to investors. They also stand ready to buy the securities at the prevailing market price thus ensuring liquidity in the market. As noted above, the term can apply in lots of different situations but it almost universally connotes a securities firm that stands ready to always purchase securities at the market price. In other words to make a market in the security.
A broker dealer can refer to a lot of different functions but generally it's a term that is applied to securities dealers that stand ready to make a market in a security or securities. A good example are primary broker dealers in the U.S. These firms are the companies that are entitled to bid on Treasury securities whenever the U.S. government wants to issue bonds. They are required to bid on the securities and take that portion that they are awarded which they in turn sell to investors. They also stand ready to buy the securities at the prevailing market price thus ensuring liquidity in the market. As noted above, the term can apply in lots of different situations but it almost universally connotes a securities firm that stands ready to always purchase securities at the market price. In other words to make a market in the security.
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26th Oct 2009 In Brokerage
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