What is a broker-dealer?
Any individual or firm in the business of buying and selling securities for itself and others. Broker-dealers must register with the SEC and are also members of the NASD and SIPC. When acting as a broker, a broker-dealer executes orders on behalf of his/her client. When acting as a dealer, a broker-dealer executes trades for his/her firm’s own account. Securities bought for the firm’s own account may be sold to clients or other firms, or become a part of the firm’s holdings.
A broker-dealer is an entity or person that employs licensed securities salespersons. The broker-dealer itself is also licensed. The federal governing body for securities broker- dealers and salespersons is the NASD (National Association of Securities Dealers). States also regulate and license broker-dealers and securities sales persons.
