by 
The Curious Bag
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A broker dealer is a person or firm that buys and sells securities. Securities are negotiable or non-negotiable instruments representing financial value. They are bought and sold in financial markets.
Dual Roles
A person or firm may act as both broker and dealer. However, the person or firm cannot be in both roles in a transaction.
Broker vs. Dealer
A person or firm acts as a broker when buying or selling on behalf of a customer. When purchases and sales are performed on behalf of the person or firm executing the trades, the person or firm is acting as a dealer.
Transactions
Securities that broker dealers buy and sell include bonds, debentures, notes, options and shares.
Registration
Broker dealers normally must register with the Securities and Exchange Commission and in the state they do business in. They must also register with the Financial Industry Regulatory Authority. The FINRA is a self-regulatory organization, defined as a non-government organization that possesses statutory responsibility to regulate its own members.
Regulation
The SEC and the FINRA regulate the activities of broker dealers. Additionally, broker dealers are subject to the securities laws in the states they do business in.
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