Difference Between Broker and Dealer

Broker vs Dealer

Broker and Dealer are both job functions associated with securities. They might appear to have same functions but as a matter of fact there are some differences between the two.

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. This goes to prove the fact that a broker becomes a dealer in due course of time.

You have to pay commission to a broker for completing a transaction. You need not pay commission to a dealer for transacting the business. This is one of the primary differences between a broker and a dealer.

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. This is possibly because of the fact they lack sufficient experience.

A dealer normally buys and sells securities on his account. A broker does exactly the opposite. He would buy and sell securities for the clients. One of the main differences between a broker and a dealer is that a dealer does trade on his own behalf whereas a broker does trade on behalf of others.

It is interesting to note that many dealers were brokers in the beginning of their career. It is equally important to note that both the dealer and the broker are businessmen.

The difference between them is their method of operation. As a matter of fact both of them should be aware of the changes that take place in the stock market on a daily basis. Clients are the primary concern for a broker whereas trade is the primary concern for a dealer.