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Inter-dealer Broker

An inter-dealer broker is a financial intermediary that facilitates trades between major financial institutions, such as banks and investment firms, in over-the-counter (OTC) markets. Inter-dealer brokers provide anonymity and liquidity by matching buyers and sellers without the need for public exchanges. These brokers operate in various markets, including government bonds, foreign exchange, derivatives, and corporate debt, helping to ensure efficient trade execution between institutional participants.

Example

A large bank uses an inter-dealer broker to execute a trade in the bond market without revealing its identity, ensuring the transaction remains anonymous.

Key points

• Facilitates trades between financial institutions in over-the-counter (OTC) markets.

• Provides anonymity and liquidity by matching buyers and sellers.

• Operates in markets like bonds, foreign exchange, and derivatives.

Quick Answers to Curious Questions

Inter-dealer brokers provide anonymity and liquidity, facilitating trades between institutional players in OTC markets.

Institutions use inter-dealer brokers to execute large trades anonymously and efficiently without affecting market prices or revealing their identities.

Inter-dealer brokers operate in markets like government bonds, foreign exchange, derivatives, and corporate debt.