The sell side of the trading industry consists of dealers and brokers who provide exchange services to the buy side. Dealers and brokers help buy-side traders trade by standing ready to assume the counterpart side of a trade. Dealers are individuals or firms who trade for their own account and risk in a securities transaction. They profit when they buy low and sell high. In contrast, brokers trade on behalf of their clients by acting as an intermediary between a buyer and a seller. Brokers arrange trades for their clients by finding other counterparties who will trade with their clients. Brokers earn their living profit by charging their clients commissions for their intermediary efforts.
Many sell-side firms deal for their own and broker deals for others. These firms therefore are known as broker-dealers or dual traders. In addition to these types, there is also that of inter-dealer brokers who facilitate inter-dealer trades.
The following table summarizes trader types and respective purposes of trading, and sets out examples for each type:
| Trader Type | Examples | Purpose of Trading |
| Dealers | – Market makers – Specialists – Floor traders – Locals – Scalpers – Day traders |
To earn bid-ask profits by standing ready to buy or sell when approached by buy-side traders (liquidity provision) |
| Brokers | – Retail brokers – Discount brokers – Full-service brokers – Block brokers – Institutional brokers – Futures commission merchants (FCM) |
To earn commissions by arranging trades for clients (brokerage services) |
| Broker-dealers | – Wirehouses (such as investment banks) |
To earn trading profits and trading commissions |
| Inter-dealer brokers | – Specialist intermediaries – Brokerage service providers |
To earn trading profits and trading commissions |
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