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Reviewed by Oct 25, 2021| Updated on
Dealers are critical individuals or entities in the market. Dealers often make securities market and offer investment-related services to investors. Hence, dealers are those makers of the market who offer the opportunity to bid and pose quotes that we can notice against the price of securities when it comes to over the counter market.
Dealers are responsible for creating liquidity in the markets and boosting growth opportunities in the long-term aspect. A dealer acts as a principal in trading when it comes to his own account and not a broker who just acts like a middleman. Dealers take responsibility for executing orders on behalf of customers.
Dealers are prominent in the securities market. They create markets in securities, provide various services to investors, and underwrite assets. Dealers seek profits from the spread between ask and bid prices.
Dealers ask profit from the difference spread across the bid and ask prices. They also play a critical role in fueling liquidity in the market. Note that dealers don’t do any kind of business on behalf of clients or help make transactions between two or more parties.
Dealers are much different from traders. Dealers merely do selling or buying businesses as an integral part of their business activities while traders sell or buy securities and assets from their own accounts and this is not done as a part of their business activities.
In recent times, the profitability and revenues of dealers have been hampered by various factors such as the requirement for high-level technology in order to cope with a quickly varying market, consolidation of the industry, and the strict environment of regulatory which has resulted in the increase of costs to be compliant.
Dealers sell and buy securities and assets through their own accounts.
Dealers in critical in boosting liquidity and promote long-term growth.
Dealers are not the same as brokers and traders.