What is a broker dealer's primary function?

A broker-dealer's primary function is to buy and sell securities on behalf of clients. This involves facilitating transactions in the capital markets, acting as intermediaries between buyers and sellers of securities. Broker-dealers provide essential services for individual and institutional investors, executing orders for stocks, bonds, mutual funds, and other investment products.

In this role, they can either act as a broker, which means they execute trades for clients in exchange for a commission, or as a dealer, which involves buying and selling securities for their own account. This dual role allows broker-dealers to provide liquidity to the market, improving the efficiency of trading and investment activities.

While underwriting government bonds and advising on bond structures are important functions within the financial system, these are not the primary functions of a broker-dealer. Underwriting typically refers to the process of raising capital for issuers, while advising on bond structures is more aligned with investment banking. Setting interest rates for securities is determined by the market forces and economic factors, not by a broker-dealer’s primary function. Therefore, facilitating trades on behalf of clients is central to the broker-dealer's operations and responsibility.