Investment dealers play a unique role in the institutional market due to their dual capability of
operating on both the buy side and the sell side:
The Buy Side
Investment dealers assist institutional investors like pension funds, mutual funds, and hedge funds in
acquiring securities to meet their investment objectives. These clients aim to optimize returns on
their invested assets, and the dealers provide them with access to securities markets, investment
advice, and execution services.
The Sell Side
On the sell side, investment dealers facilitate the issuance of new securities. They underwrite and
distribute these securities, providing liquidity to the market. They also produce research reports and
provide trade execution services to institutional and retail clients. This dual operation is critical for
maintaining market efficiency and ensuring the smooth functioning of capital markets.
This dual-role capacity makes investment dealers pivotal in bridging gaps between the needs of
securities issuers and institutional investors. They enhance market liquidity, efficiency, and
transparency through their intermediary functions.
Reference:
Canadian Securities Course, Volume 1, Chapter 1: The Investment Dealer’s Role as a Financial
Intermediary
Canadian Securities Course, Volume 2, Chapter 27: Working with the Institutional Client.
