Primary Dealer
Categories: Trading
The government doesn't like to work with a lot of people...at least when it's selling bonds. In that way, it's like one of those mob bosses who only meets with his immediate lieutenants.
In the government's case, though, the reasoning has nothing to do with wire taps or informants. It just has trillions of dollars to move around, and doesn't have time to deal with you trying to buy $100 in Treasury bonds for your nephew's first birthday.
When the U.S. government looks to sell securities (like notes or bonds), it doesn't go directly to the market. Instead, it finds a set of intermediaries, who buy a large volume of the securities. These buyers are known as the primary dealers (banks and other large financial institutions, mainly). Once they purchase the bulk-sized portion of the bonds, they turn around and sell smaller lots to regular retail customers.
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Finance: What is a Broker-Dealer?16 Views
Finance a la shmoop.. what is a broker-dealer? It's one of [Homeless guys holding help signs]
these guys who's making less than minimum wage right no that'd be a broke
dealer and you won't find too many of them in Lake Tahoe but yeah a broker is [Man talking about broker-dealers in Lake Tahoe]
just someone who takes a commission for selling stuff they live wherever there
are transactions in cars, boats, planes, homes and securities like stocks and
bonds so yeah it's a broker - dealer sort of like a writer-director
sexual deviant in Hollywood... Key takeaway here the broker dealer brokers
securities ie they take a commission and they deal in securities like they carry [People playing blackjack]
their own inventory of ten million shares of Amazon this week's selling
them for twelve hundred ninety dollars and 32 cents a share and buying them for
twelve hundred eighty eight dollars seventy nine cents a share making a
spread of...
equals a dollar fifty-three a share the dealer makes a spread of a buck fifty [Dealer and market transferring cash and stock]
three every time she trades a share of the Walmart killing behemoth yeah it's
sort of a Goliath slaying Goliath story there that Amazon Walmart thing we're
watching it so think about broker-dealer making money on both sides of the trades
that's the way to go if you're going to Wall Street make money no matter what [Man walking on Wall Street]