First, a bit of background on the structure of the U.S. equity markets.
Big, blue-chip stocks trade on the NYSE or the NASDAQ. Those represent the key big-time equity exchanges.
But there's another exchange system, known as the Over-the-Counter Bulletin Board, or OTCBB.
Imagine a shopping mall. The NYSE and the NASDAQ represent the big stores: Macy's, the Apple Store, the Build-a-Bear Workshop, etc. The OTCBB represents the slightly sketchy pagodas set up in the mall walkways...the small booths selling cell phone accessories and sunglasses and cut-rate perfume.
The over-the-counter market, also known as the pink sheets, includes a lot of stocks that couldn't meet listing requirements for the bigger exchanges.
Okay, with that in mind, the interdealer quotation system is an electronic trading system that connects the OTCBB, as well as the NASDAQ and the NASDAQ small-cap market. Members use it to trade stocks on these exchanges.
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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]