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Market Guides > How dealers make money

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Published: 15th October 2009 by William Webster

If you don't work as a dealer you probably see transactions or their results after they have been completed. Your role may be in operations, finance, risk, audit or compliance. You expect dealers to be profitable, after all isn't this what they are paid for?

You definitely know that they can lose money too! So how do dealers make profits and what are the implications for the business? There are three ways a dealer can make money:

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Document Summary

Three ways dealers make money. Trading. Bid offer spreads, example. Arbitrage, futures and swaps examples. Risk taking. Risk appetite & limits. How does your firm make money?

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13th September 2009

If you borrow or save money at your local bank I expect the sums involved are normally small but when banks deal with each other the amounts are much larger. This market between banks for borrowing and lending cash is known as the interbank or money market. It allows banks with shortfalls to borrow and those with surpluses to lend. Imbalances like this occur everyday and every major currency has its own interbank market. It's at the core of the world's financial system and any disruption to it is potentially disastrous. Let's find out a little more.