What Broker-Dealer Financial Services are and Why They Matter to Your Investment
Broker-dealer financial services are engagements in effecting transactions in securities on behalf of others or own account. The name broker-dealer denotes two relationships. Under the broker relationship, a person or an entity acts in an agency capacity. In this case, the broker-dealer helps a customer by facilitating buying or selling of a security. The facilitator has no money at risk and only attempts to match up a buyer and a seller. On the other hand, under the dealer relationship, the dealer is a principal in the transaction. He/she literally buys or sells securities. A broker-dealer works under extensive regulations. There is a requirement for disclosure in writing whenever acting as a dealer. They can only act in one capacity at each trading and not in both capacities. Some broker-dealers will call themselves registered broker-dealers.
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