A trade needs someone to agree its price, manage its obligations and transfer cash and securities. Those jobs can be performed by different institutions. This lesson identifies users, brokers, dealers and infrastructure providers, then separates an institution’s role from its reason for trading. That distinction helps you read the arrangements in exchange and OTC markets.
Learning objectives. By the end of this note you should be able to:
- identify the function performed by major market institutions;
- classify a trade by motive rather than institution name;
- explain the difference between a broker, dealer and clearing house;
- trace a client trade through execution, clearing, settlement and custody.
In this lesson
- Users of capital and risk transfer
- Intermediaries
- Market infrastructure
- Motives: hedger, speculator, arbitrageur
- A trade passes through distinct jobs
The full lesson, with worked examples and exercise solutions, is for members.
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