Broker-dealer - is an entity that trades in securities for the accounts of its customers as well as for its own account. Section 3(4) of the 1934 Act defines a broker as:   ".... any person or entity that is engaged in the business of effecting transactions in securities for the account of others."  Unlike a broker who acts as agent, a dealer acts as principal. Section 3(a)(5) of the 1934 Act generally defines a dealer as: "...any person or entity engaged in the business of buying and selling securities for his/her/its own account, through a broker or otherwise."

Pursuant to Section 15 of the Securities Exchange Act of 1934 (the "1934 Act"), most brokers and dealers are required to register with the U.S. Securities and Exchange Commission ("SEC") and join a "self-regulatory organization," or SRO, such as the Financial Regulatory Authority, also known as FINRA (formerly the National Association of Securities Dealers or NASD).

A firm is considered to be acting as a broker when it executes trades for its customers. When the firm executes trades for its own account, the firm is considered to be acting as a dealer.