SEARCH THE BUSINESS GLOSSARY
- individual or firm acting as a principal in a securities transaction. Principals trade for their own account and risk. When buying from a broker acting as a dealer, a customer receives securities from the firm's inventory; the confirmation must disclose this. When specialists trade for their own account, as they must as part of their responsibility for maintaining an orderly market, they act as dealers. Since most brokerage firms operate both as brokers and as principals, the term broker-dealer is commonly used.
- one who purchases goods or services for resale to consumers. The element of inventory risk is what distinguishes a dealer from an agent or sales representative.
person or firm that acts as a principal , buying (or selling) from their own account for position and risk, as opposed to a broker , who acts as an agent for customers and is paid a commission. Dealers expect to make a profit by selling at a higher price or by correctly guessing future interest rate movements.
The gramm-leach-bliley act of 1999 removed many Depressionera restrictions on dealer activities of commercial banks. Banks are now permitted to register their investment securities subsidiaries with the Securities and Exchange Commission, which supervises the securities underwriting of bank-owned securities firms. The Gramm- Leach-Bliley Act excludes bank underwriting of permissible securities (such as municipal revenue bonds), bank activities as trustee or fiduciary , and the sale of asset-backed securities originated by the issuing bank from SEC registration. See also dealer bank ; primary dealer ; securities subsidiary .
In the securities industry, investment banking firms often act as both broker or dealer, depending on the transaction, and the term broker- dealer is commonly used when referring to a dealer firm. See also dealer bank ; primary dealer ; securities subsidiary .
- ( securities ) a merchant who regularly engages in the purchase and resale of securities to customers. Stocks, bonds, and other financial instruments are considered inventory and are not subject to capital gain or loss treatment for a dealer.
- one who buys and sells from his or her own account. The number of sales necessary for dealer status may be low (for example, three or four sales for a real estate dealer). The merchandise is inventory; consequently, any gain on the sale is ordinary income .
- a person who regularly sells or otherwise disposes of personal property on the installment plan, or who disposes of real property that is held by the taxpayer for sale to customers in the ordinary course of the taxpayer's trade or business. A dealer may not use the installment method on certain sales.
Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright c 2000, 1994, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.