A broker-dealer is an individual or firm acting as agent or principal in a securities transaction.

Broker-dealer firms exist in financial markets to assist investors with executing trades and making financial decisions. Broker-dealers may serve as principals or agents to execute trades on behalf of customers. 

Broker-dealers are an agent when acting on a client’s behalf with a third-party. Broker-dealers act as principals when, in trading for their own account, they sell customer securities from the broker-dealer’s own inventory.

The phrase broker-dealer is used in U.S. securities regulation to describe stock brokerages because they are both broker and dealer. In other countries, the phrase is used to describe firms that engage in securities transactions on behalf of their clients.

The term broker-dealer is generally used to describe a firm that is in the business of buying and selling securities for its own account or on behalf of its customers.

A broker-dealer must be registered with the Financial Industry Regulatory Authority (FINRA) to do business in the United States. Registration allows broker-dealers to buy and sell securities, offer investment advice to clients, and solicit new business.

In order to become registered, broker-dealers must meet certain financial requirements and pass a qualifying examination. Once registered, broker-dealers are subject to FINRA' rules and regulations.

When placing a trade, an investor uses a brokerage firm to buy or sell a security and typically pays a fee for the service. 

There are two types of brokerages: full-service and discount. Full-service brokers provide multiple services to clients, including financial advice, retirement planning, strategies, etc. Discount brokers execute the trades the client wants to make.

Dealers make trades for themselves and keep an inventory of securities. Primary dealers work with the Federal Reserve to create liquid markets in securities like Treasury bonds. Many customers of large institutions are broker-dealers who execute trades for clients and their employers.

Brokerage firms provide tools and resources that allow investors to make trades and seek financial advice. A broker-dealer may provide other services, such as underwriting, market making, and custody. 

As brokerages offer more comprehensive services, many of the broad descriptors traditionally associated with financial service firms are less distinct as they become increasingly interconnected.