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. A dealer makes money on the difference between bid and ask prices, so it wants to buy low and sell high.

If the dealer does not own the bonds, 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 wi

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