We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is a Dealer Bank?

Malcolm Tatum
Updated: Feb 02, 2024

Dealer banks are entities that purchase and sell government or agency securities. A dealer bank may be a commercial bank that specializes in the sale of these types of securities, or a department of a bank that is devoted to handling the sale and purchase of various types of municipal securities. The bank or bank department has full authority to underwrite just about any type of government issued debt securities, including municipal bonds.

The operation of a dealer bank is conducted within regulations put in place by the ruling government in the country of origin. In the United States, each dealer bank in operation is registered with the Municipal Securities Rulemaking Board. Establishing regulations that specify the conditions for operation help to ensure the government securities are managed appropriately with each transaction.

In general, the rules that govern a dealer bank are not that much different from the regulations observed by all banking institutions. The difference is that the focus is on specific types of securities and not the offering of a range of general banking services. The narrow focus allows the bank to operate in a focused niche of the financial market, and often provides the best avenue for purchasing and selling government issued bonds and other securities.

The types of securities that a dealer bank manages are often essential to funding important projects that enhance the standard of living for many people. Federal and local municipal bonds are often utilized to finance improvement projects such as roadways, bridges, and various types of public service buildings. Investors who choose to purchase these types of securities from an authorized municipal securities dealer not only stand to earn a decent return on the investment, but also aid in the enhancement of the infrastructure for the nation as a whole.

Another advantage for investors is that the types of securities offered through a dealer bank tend to be tax free. This is often the case with local municipal bonds. A dealer bank will have access to a wide range of these types of bonds, providing the investor with the ability to evaluate a number of opportunities before settling on a particular bond to purchase.

Investors who have a need to sell a government issued security also find that a dealer bank can be helpful. Going through the bank to effect a sale of the bond issue will ensure the transfer is done within government regulations and that the investor receives an equitable price for the sale.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.