What are interdealer brokers?

Jan 02, 2013

Share with
friends:

Comments (2) Print this article

The Libor fixing scandal has shone a spotlight on the shadowy world of interdealer brokers. Tim Bennett explains who they are and what they do.


• Having trouble viewing this video? Click here for a version optimised for slower connections.

• To download Tim's videos to your mobile device via iTunes, click here.

• Watch all of Tim's video tutorials here.

Comments (2)

Share with
friends:

Related articles

Comments

Leave a comment

  • 1. Ben

    (02 January 2013, 09:57AM)  Complain about this comment

    Why don't market makers just sell their stock or currency in the open market increments so they transact unnoticed, why do they need to use an interdealer broker?

  • 2. Tim Bennett

    (02 January 2013, 05:21PM)  Complain about this comment

    Ben - as mentioned in the video IDBs are particularly useful for deals involving illiquid securities and/or very large trades and/or unusual trades. Market makers tend to know each other's voices, trading patterns etc so an IDB desk at a bank, or an independent IDB firm can act as a mask, disguising the market maker and/or their intentions. Electronic order books can be set up as an alternative to achieve this but without the associated certainty of execution (being able to get a deal done on the terms you want). Hope that helps! Tim.

Leave a comment

This will be the name displayed with your comment.

This helps us verify comments are genuine. It will not be displayed anywhere on the site and is stored confidentially.

Please keep your comment within 1,000 characters and relevant to the main topic. We encourage healthy debate, but we don't allow insults or bad language. Anything off topic or unpleasant, we'll remove. Enjoy the conversation! Thank you.

captcha To prevent spam-related comments please enter the characters shown in the 'Captcha' box to the left.

By leaving a comment you accept our terms and conditions.


>