Stock markets (exchanges like the NYSE or the NASDAQ) are public markets...anyone can jump in. You just need a broker or an online trading account and you're good to go.
Interdealer markets are reserved for large financial institutions, companies like banks or investment funds. Instead of being organized as a formal exchange, an interdealer market exists as a loose collection of dealers (hence the name, "interdealer"). Foreign currency is often traded in this way. The setup lends itself to transactions involving large amounts of currency.
Think of it like going to Florida. There's the public beach, with kids running around, and gross, sunburnt, middle-aged people in bikinis and speedos lying in tightly-packed rows of blankets. But then, nearby, you can just catch a peek of the private beach: tanned, toned people in private cabanas sipping frosty drinks with pineapple wedges on the lip.
That's the stock market vs. the interdealer market.
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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]