The Role of Broker-dealers in the Financial Industry

A Super Lawyer for three consecutive years, Sylvia M. Scott serves as a partner and the head of the Securities Regulation Practice Group with Freeman Freeman and Smiley, LLP, in Los Angeles. Sylvia M. Scott’s nearly three decades of experience in the securities regulation field has solidified her in-depth knowledge of the broker-dealer industry.

In the financial sector, a broker-dealer can be an individual or firm that conducts securities transactions for itself and its clients. A broker-dealer serves as a broker or agent when buying or selling for clients, while it serves as a dealer or principal when it performs transactions for its own account. Within the U.S. securities regulation industry, the term “broker-dealer” often refers to stock brokerages since most serve as both principals and agents.

Broker-dealers also perform a wide range of other vital financial-sector roles, including raising capital for companies, delivering investment advice, and releasing investment research. Overall, broker-dealers are essential because they support liquid markets and help connect buyers and sellers for efficient transactions. Broker-dealers are regulated and licensed by the exchanges, the Financial Industry Regulatory Authority, and the Securities and Exchange Commission.

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