Dealer Market
A dealer market is a financial market structure where dealers (market makers) buy and sell securities for their own accounts, quoting bid and ask prices to facilitate trading. Unlike auction markets where buyers and sellers interact directly, dealers provide liquidity by maintaining an inventory of securities and standing ready to trade. This model is common in over-the-counter (OTC) markets for bonds, currencies, and some equities.
Developers should understand dealer markets when building financial technology (fintech) applications, such as trading platforms, market data systems, or algorithmic trading tools, as it's fundamental to how many securities are traded. Knowledge is crucial for roles in investment banking, quantitative finance, or regulatory technology (regtech) to model market behavior, ensure compliance, or optimize execution strategies. It's also relevant for blockchain and cryptocurrency projects that implement decentralized finance (DeFi) protocols mimicking traditional market structures.