one of the three dozen or so banks and investment dealers authorized to buy and sell government securities in direct dealings with the federal reserve bank of New York in its execution of Fed open market operations . Such dealers must be qualified in terms of reputation, capacity, and adequacy of staff and facilities.

government securities dealer reporting its daily trading volume and portfolio positions to the Federal Reserve Bank of New York. The New York Fed, which manages the Open Market Account desk for the Federal Reserve System, does business with primary dealers when it sells, or purchases securities in open market operations To be accepted by the Fed as one of the three dozen or so primary dealers, a dealer must be willing to act as a market maker in all Treasury auctions of U.S. Treasury bills, notes, and bonds and to maintain adequate capital reserves, as determined by the Fed. Nonbank primary dealers finance their inventories by engaging in repurchase agreement and by pledging securities to obtain collateral loan from large banks.