Series 53: A Dealer Market

Taken from our Series 53 Online Guide

A Dealer Market

The secondary market for municipal bonds is a dealer market, meaning that most purchases and sales come out of a dealer’s own inventory. Dealers will quote bid and ask prices and take a markup on buy orders and a markdown on sell orders. If the dealer does not own the bonds it sells, it will purchase the security from another dealer. When a broker is employed to make a trade, the broker will generally find a dealer to be the counterparty.

Dealers with large national firms will operate in almost any segment of the municipals market. Smaller firms w

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