BROWSE

Dealer Market

What is a 'Dealer Market'

A financial market mechanism wherein multiple dealers post prices at which they will buy or sell a specific security of instrument. In a dealer market, a dealer – who is designated as a “market maker” – provides liquidity and transparency by electronically displaying the prices at which it is willing to make a market in a security, indicating both the price at which it will buy the security (the “bid” price) and the price at which it will sell the security (the “offer” price). Bonds and foreign exchange trade primarily in dealer markets, while stock trading on the Nasdaq is a prime example of an equity dealer market.

Explaining 'Dealer Market'

A market maker in a dealer market stakes its own capital to provide liquidity to investors. The primary mode of risk control for the market maker is therefore the use of the bid-ask spread, which represents a tangible cost to investors.


Further Reading


Market structure, informational efficiency and liquidity: An experimental comparison of auction and dealer markets
www.sciencedirect.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

Optimal dealer pricing under transactions and return uncertaintyOptimal dealer pricing under transactions and return uncertainty
www.sciencedirect.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

Quote disclosure and price discovery in multiple-dealer financial marketsQuote disclosure and price discovery in multiple-dealer financial markets
academic.oup.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

Dynamic order submission strategies with competition between a dealer market and a crossing networkDynamic order submission strategies with competition between a dealer market and a crossing network
www.sciencedirect.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

An empirical study of bond market transactionsAn empirical study of bond market transactions
www.tandfonline.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

Risk allocation and inter-dealer tradingRisk allocation and inter-dealer trading
www.sciencedirect.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

Tick size, bid-ask spreads, and market structureTick size, bid-ask spreads, and market structure
www.jstor.org [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

Is price behavior scaling and multiscaling in a dealer market? Perspectives from multi-agent based experimentsIs price behavior scaling and multiscaling in a dealer market? Perspectives from multi-agent based experiments
link.springer.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

On dealer markets under competitionOn dealer markets under competition
www.jstor.org [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …

Intraday behavior of market depth in a competitive dealer market: A noteIntraday behavior of market depth in a competitive dealer market: A note
onlinelibrary.wiley.com [PDF]
… The trading volume and Roll's (Journal of Finance (1984) 1127–1139) serial covariance estimator are inappropriate … Participants were students of economics and business administration … All price series with the exception of opening and closing prices in the dealer market have a …


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