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What is a Broker/Dealer?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 21 August 2016
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    2003-2016
    Conjecture Corporation
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Performing a double role for clients, a broker/dealer takes on both the responsibilities of a broker and a dealer. In their roles as dealers, a broker/dealer will act on the behalf of the brokerage firm, initiating transactions that involve the firm’s account. As brokers, the broker/dealer will focus on the needs of clients of the firm, handling transactions that are placed on behalf of client accounts.

While functioning on behalf of the firm, the broker/dealer will go about the usual business of buying and selling securities on behalf of the brokerage. This will involve all the usual aspects that are involved with creating transactions. The broker/dealer engages in trades that involve both the buying and selling of various stocks, bond, and other securities. As in all types of financial transactions, the broker/dealer will perform due diligence in investigating the background of an investment opportunity, making sure the investment is in the best interests of the firm, and seek to secure the investment as the best price possible.

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As a dealer who is charged with the responsibility of handling transactions on behalf of the client, the broker/dealer will interact with each customer of the firm to ensure that transactions are conducted in a timely manner. When possible, the broker/dealer may also work to obtain a more favorable price for an investment, making use of the connections cultivated by the firm. Just as an investment dealer, the broker/dealer will seek to serve the client in the most professional manner possible, offering advice and researching potential investment deals that may be of interest to the investor.

A professional broker/dealer will make sure to keep the business transactions that are conducted on behalf of the firm, as well as those orders that are executed for a client, in the strictest confidence. With access to proprietary information that relates to both the client base and the brokerage firm itself, the broker dealer is in a unique position. The broker/dealer is generally well organized, takes his or her responsibilities seriously, and derives a great deal of satisfaction in helping both the brokerage firm and the client to increase the value of their respective portfolios.

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