With no central exchange in the wholesale secondary markets, financial institutions need to find a way to find information, liquidity and anonymity for their trading activities. This created a need for Interdealer Brokers (IDB).
An IDB is completely independent and operates in the over-the-counter (OTC) markets. The broker provides potential buyers and sellers in these markets with the necessary information they need to execute their trades. It means that the dealer can ascertain the best price available in the market which the IDB must work to find them. The broker then earns a commission from executing the trade.
As the IDB has specialist, up to the minute market knowledge, they can offer colour to the dealer at any time. This means that the dealers save time therefore increasing profit making opportunities as a result of making more trades in a day. The service of the IDB can be the difference between completing a trade or not.
As this market evolves with the addition of new products and of electronic trading, IDB’s continue to study the needs of their clients and provide all the information and resources they require in order to execute trades in a timely and efficient manner. It is this service that has cemented the IDB’s role in the wholesale financial markets around the world.
