A financial intermediary that may function as a dealer or as broker, depending on the type of trade. When a client enters an order, broker-dealers can choose to broker a deal with a counterparty, or buy or sell the security directly from the client.    

However, there is an inherent conflict of interest.  As a broker, it should seek the best prices for the client, but as a dealer, its goal is to profit through prices or spreads. As a result, traders typically place limits on how their orders are filled when they transact with broker-dealers.

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