dealer
Dealer: someone who trades stocks or other assets from their own pocket, buying and selling to make money on the difference, more than passing orders for a fee.
In plain English
Who exactly are you trading with when you buy shares on the Nigerian Exchange or on an app that shows you a live price?
Most people assume it is some faceless computer matching buyers and sellers, but a lot of the time there is a dealer sitting behind that price, and understanding what a dealer actually does explains why prices move the way they do.
A dealer trades with their own money and their own risk. If you want to sell 5,000 units of a stock right now and there is no ready buyer, a dealer can step in, buy those shares from you using their own funds, and hold them until someone else wants to buy. They quote a price to buy at, say ₦48, and a price to sell at, say ₦50, and that gap, called the spread, is how they earn a living. It is different from a broker, who simply connects you to a buyer or seller and charges a commission without ever owning the asset personally.
In Nigeria, licensed dealing member firms on the Exchange do exactly this, they keep an inventory of shares and government securities, quoting prices so that trading keeps flowing even when buyers and sellers are not perfectly matched at the same moment. In the United Kingdom, market makers on the London Stock Exchange play a similar role, standing ready to buy or sell shares like Tesco or BP so trading stays smooth even during calm hours.
Think about a Nigerian in London who wants to send money home by buying dollar denominated bonds through a local Nigerian dealer. The dealer already holds a stock of these bonds and simply sells from that stock, pricing in a small margin for the convenience and the risk they carry by holding the asset in the first place.
That margin is not greed, it is payment for standing ready with money and stock when nobody else will.
A dealer buys a stock at ₦48 per share to hold in their own account, then offers to sell it at ₦50. Someone needing to buy 1,000 shares immediately pays the ₦50 price, and the dealer pockets ₦2,000 as their spread for providing that instant liquidity.
Questions people ask
Is a dealer the same as a broker?
No. A broker connects buyers and sellers and earns a commission without owning the asset. A dealer trades using their own money and earns from the spread between buying and selling prices, taking on real risk if prices move against them.
Can an ordinary Nigerian investor become a dealer?
Not casually. Acting as a dealer on the Nigerian Exchange requires a licence, capital requirements, and registration as a dealing member firm, since you are trading with your own funds and taking on market risk for others' benefit.
Why does a dealer's spread sometimes get wider?
When a stock is less traded or the market gets volatile, dealers widen the gap between buying and selling prices to protect themselves from being stuck holding shares that could quickly lose value.
Last reviewed