Sell-side: Difference between revisions

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-{{a|people|}}A [[broker]], [[dealer]] or [[market-maker]]: one given to offering financial services and products  with a view to ''selling'' them — hence, the ''~-side'' — to the rapacious class of institutional investors and their agents and investment advisors whom, since they ''buy'' these things, we generally know as the “[[buy-side]]”.
+{{a|people|}}{{d|Sell-side|sɛl saɪd|n|}}
+A [[broker]], [[dealer]] or [[market-maker]]: one given to offering financial services and products with a view to ''selling'' them — hence, the ''sell-side'' — to the rapacious class of institutional investors and their agents and investment advisors whom, since they ''buy'' these things, we generally know as the “[[buy-side]]”.
-Though a confederacy of dunces might wish to persuade you otherwise, the sell-side are the true heroes of the financial markets, and in any case of ambiguity, deserve always to be given the [[For the avoidance of doubt|benefit of the avoidance of doubt]].
+The [[sell-side]] are also known as [[broker]]s, [[dealer]]s, and [[broker-dealer]]s. [[Broker]]s act as [[agent]]s to put a buyer and a seller together and charge a [[commission]]. [[Dealer]]s act as [[principal]], buying from a seller, and on-selling to a buyer, but the economic upshot of what they do in either case is the same. They take a commission (brokers), or a spread (dealers), but try not to take on market risk.
+Three important things to bear in mind about the [[sell-side]]:
+{{l1}}'''Dealers aspire to be market neutral''': Typically the sell-side dealers provide market exposure to customers without taking a market position themselves.<li>
+'''Dealers delta-hedge''': since a [[swap|swap contract]] is inherently a principal-to-principal contract and not an [[Agent|agency]] arrangement, and since entering it necessarily means the dealer ''does'' change its market position, the dealer will execute an offsetting [[delta-hedge]] in the market to “flatten out” that position.<li>
+'''Dealers are regulated''': Because their role tends to be systemically important and they aggregate a lot of risk taken on by their customers, dealers tend to be heavily regulated, both in terms of their conduct of business — with whom they can do business, and on what terms, and prudentially — in how they manage customer and market risk and how much capital they must hold. </ol>
+''If'' dealers fail, it tends to be more or less apocalyptic for the market. But the market is getting better at managing the stress of dealer failures ([[Credit Suisse]] caused a lot less dislocation than did [[Lehman]]), and in truth [[dealer]]s do not fail that often.
-In [[Hary Poter]] terms, the sell-side are from ''Gryffindor''.
 {{sa}}
-*[[Buy-sdie]]
+*[[A swap as a loan]]
+*[[Buy-side]]
 *[[Horcrux]]
+*[[Party A and Party B]]