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Difference Between Broker and Dealer

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The stock market is a complex financial entity made up of many different businesses and participants. Brokers and dealers handles a large portion of stock market activities. Broker and dealers are people involved in buying and selling of securities. They engage the investors and are often an intermediary between investors and the stock market. Though both have almost the same work, they are different in many aspects.

Brokers

A Stock Broker is an agent or middleman, matching up buyers and sellers on the stock market. He sells or buy stocks on behalf of and for the accounts of their clients, charging a fee or commission for his services. Stock brokers may also offer advices in which stock or funds to invest.

Broker

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Dealer

Any individual or firm in the business of buying and selling securities for itself and others. A 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 Dealer is someone who acquires securities from sources not usually available to the general public and then sells them at a markup to his customers.

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Difference Between Broker And Dealer

  • A broker is a person who does not have a big experience in dealing with securities whereas a dealer is said to have a lot of experience in the field
  • 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
  • You have to pay commission to a broker for completing a transaction. You need not pay commission to a dealer for transacting the business.
  • Dealers reserve rights when it comes to freedom regarding buying and selling of securities. Brokers on the other hand do not have the right of freedom of buying and selling the securities
  • A dealer does trade on his own behalf whereas a broker does trade on behalf of others(Clients).

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