What is dealer

Dealers prevent that same lag from happening in the securities market. The term dealer market refers to the transactions that dealers make where they buy and sell shares to and from their own accounts. Dealer markets increase the liquidity of the securities market, as it makes it easier for sellers to get rid of their shares at the time they want to.

Suppose the country were experiencing a bear market , meaning a period of economic decline. You buy some shares in your favorite company. Over the next few years, the country goes through a period of huge economic growth and the price of the shares you bought skyrockets. You want to make sure to lock in your earnings, so you sell when the price is high, resulting in huge profit for you.

But what happens to dealers when people are selling when prices are high and buying when prices are low? Dealers have to make money just like everyone else.

Dealers make money by creating a spread, which is the difference between the purchase price and the sale price. Instead, they make money by creating a small profit margin for each share and selling lots of them. If they sell millions of shares at a particular period of time, then making a few cents per share is still a lot of money. First, dealers have to abide by the duty of fair dealing. The statute simply requires that they treat customers fairly — Case law has made more specific rulings on what does and does not constitute fair dealings.

Dealers also have to meet certain suitability requirements. This rule means that if they engage in recommending certain financial products to clients, they can only recommend those that are suitable for a client based on their financial situation, needs, and investment portfolio. If a dealer fails to meet the requirements set forth by the SEC , they might be subject to both civil and criminal penalties.

Depending on the situation, the penalty might be as small as repaying the money that they obtained from clients through fraudulent activity. More severe penalties might include criminal fines or prison time. Most dealers receive a Series 7 license, which allows them to be a General Securities Representative and to sell a wide variety of securities products such as stocks, bonds, mutual funds , and exchange-traded funds ETFs.

There are many terms to describe different individuals who participate in the investment world. A dealer is a financial professional who trades stock shares to turn around and sell for a profit. Similar to a dealer, a broker is also an individual or firm that buys and sells securities. The difference between a dealer and a broker is like the difference between a personal stylist and a clothing retailer.

When you hire a personal stylist, they might help you define your style and help you find clothes that match it. MicroSectors U. Spread betting Stock Investing Charges and fees. For traders. News and features. Webinars Economic calendar Capital. Professional clients Institutional. Learn to trade. The basics of trading. Glossary Courses.

Popular markets guides. Shares trading guide Commodities trading guide Forex trading guide Cryptocurrency trading guide Indices trading guide ETFs trading guide. What is a margin? Owner Capital. Our Global Offices Is Capital. Compliance In the press Blog Careers. Referral programme Partnership Programme. Support center. Definition of dealer noun from the Oxford Advanced Learner's Dictionary.

Find the answers with Practical English Usage online, your indispensable guide to problems in English. Join our community to access the latest language learning and assessment tips from Oxford University Press! Find out which words work together and produce more natural sounding English with the Oxford Collocations Dictionary app. Toggle navigation. Filters 0. Words form: dealers. A person who deals.

One that is engaged in buying and selling. A used-car dealer; a drug dealer.