Broker-Dealer

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A broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers act as an intermediary between a buyer and seller, usually charging a commission to execute trades. Broker-dealers role in the financial markets is creating an infrastructure that facilitates stock trading.

When investors buy and sell stock they deal with a broker who are brokering the exchange. Whereas, when the firm (broker) does its own trades for the firm’s benefits they are dealing within the financial markets.