In financial services, 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.
In addition to execution of securities transactions, broker-dealers are also the main sellers and distributors of mutual fund shares.
Dealers are large financial institutions that sell securities to end users and then hedge their risk by partaking in the interdealer market.
§ 78o), with a number of exceptions, are required to be members of the Securities Investor Protection Corporation (SIPC) (pursuant to 15 U.S.C.
Under either definition, the person must be performing these functions as a business; if conducting similar transactions on a private basis, they are considered a trader and subject to different requirements.
[5] When acting on behalf of customers, broker-dealers have a duty to obtain "best execution" of transactions, which generally means achieving the best economic price under the circumstances.
Securities companies must be organized as kabushiki kaisha with a statutory auditor or auditing committee, and must maintain minimum shareholder equity of ¥50 million.