Difference Between Broker and Dealer

Broker vs Dealer

Brokers and dealers are terms associated with securities. Though both have almost the same work, they are different in many aspects. The main difference between a broker and a dealer is in respect of their role in the market, as well as the capital required. A broker is a person who executes the trade on behalf of others, whereas a dealer is a person who trades business on their own behalf.

A dealer is a person who will buy and sell securities on their account. On the other hand, a broker is one who will buy and sell securities for their clients.

When dealing with securities, dealers make all decisions in respect of purchases. On the other hand, a broker will only make purchases as per the client’s wishes. While dealers have all the rights and freedom regarding the buying and selling of securities, brokers seldom have this freedom and these rights.

When talking about their experience, a broker has only a little experience in the field compared to dealers. It has also been seen that brokers become dealers once they get experience.

A broker is normally paid a commission for transacting the business. Brokers do not have any assets, but only act as middlemen between sellers and buyers. On the other hand, a dealer is not paid a commission, and he or she is a primary principal. Dealers will have assets of their own which they sell at a later stage.

Brokers and dealers have to adhere to certain guidelines and regulations. Both brokers and dealers have certain financial responsibilities.

Summary:

1. A broker is a person who executes the trade on behalf of others, whereas a dealer is a person who trades business on their own behalf.

2. A dealer is a person who will buy and sell securities on their account. On the other hand, a broker is one who will buy and sell securities for their clients.

3. While dealers have all the rights and freedom regarding the buying and selling of securities, brokers seldom seldom have this freedom and these rights.

4. A broker has only a little experience in the field compared to dealers. It has also been seen that brokers become dealers once they get experience.

5. A broker is normally paid a commission for transacting the business. A dealer is not paid a commission, and he or she is a primary principal.

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