What is a Broker-Dealer

A broker-dealer is a financial industry player that is licensed to operate in the capacity of broker.

A broker dealer has to initially apply with the Securities and Exchanges Commision (SEC) to become a dealer. The process involves filling a questionary where the dealer needs to disclose several key pieces of information.

The questionary applied by the SEC is very detailed, and gathers information about the financial and institutional status of the broker dealer. The questionary is divided into more than thirty pages, with many questions that concern the future actions of the broker.

The SEC is the only instittution responsible for accepting a new broker dealer. This is the main reason why dealers have to disclose a large amount of information.

The SEC not only reviews the original formulary for broker dealer application. It is also responsible for renewals if necessary. If any of the provided information changes during the operations of the broker-dealer, it is necessary to provide an amendment to the original application.

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