In the not-too-distant past of 2007, the iPhone was only available for AT&T (Cingular), who had an exclusive right to sell 'em.
When it comes to selling US treasury and municipal bonds, only a dealer bank, which is a commercial bank registered with the MSRB (Municipal Securities Rulemaking Board), is authorized to sell them as a principal. Same idea as T and the iPhone. Any other investment bank or financial institution is obtaining them to sell as a broker and purchasing them from a dealer bank for resale.
This trading plate is a key source of revenue for JP Morgan Chase, Bank of America, and other commercial banks. Of course, when the dealing banks who were making money hand over fist in FNMA and FDMC subprime mortgage bonds got hit with the collapse of that market, they made money on top by acquiring established brokerages such as Bear Stearns, Merrill Lynch, and Lehman Bros for pennies on the dollar.
Moral of the tale: It pays off to be in bed with the government. Careful...they hog the covers.
Related or Semi-related Video
Finance: What is a Broker-Dealer?16 Views
Finance a la shmoop.. what is a broker-dealer? It's one of [Homeless guys holding help signs]
these guys who's making less than minimum wage right no that'd be a broke
dealer and you won't find too many of them in Lake Tahoe but yeah a broker is [Man talking about broker-dealers in Lake Tahoe]
just someone who takes a commission for selling stuff they live wherever there
are transactions in cars, boats, planes, homes and securities like stocks and
bonds so yeah it's a broker - dealer sort of like a writer-director
sexual deviant in Hollywood... Key takeaway here the broker dealer brokers
securities ie they take a commission and they deal in securities like they carry [People playing blackjack]
their own inventory of ten million shares of Amazon this week's selling
them for twelve hundred ninety dollars and 32 cents a share and buying them for
twelve hundred eighty eight dollars seventy nine cents a share making a
spread of...
equals a dollar fifty-three a share the dealer makes a spread of a buck fifty [Dealer and market transferring cash and stock]
three every time she trades a share of the Walmart killing behemoth yeah it's
sort of a Goliath slaying Goliath story there that Amazon Walmart thing we're
watching it so think about broker-dealer making money on both sides of the trades
that's the way to go if you're going to Wall Street make money no matter what [Man walking on Wall Street]
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