Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Sell Side

What it is:

Sell side, sometimes called prime brokers, refers to investment firms which sell securities and assets to money management firms and corporate entities. They may be considered intermediaries which both perform research and conduct the actual purchase of securities.

How it works (Example):

Sell side firms are registered members of a stock exchange and they take orders from buy side firms. The services they offer include brokering, dealing, advisory services and investment research.

In short, they both generate trading ideas and execute trades.

Sell side firms charge buy side firms for the product (the stock), the cost of trading the stock (the trader's salary) and the cost of the research (the analyst's salary). Many sell side firms now delineate the cost of their products so that purchasing firms know they are paying an appropriate price for the best research available.

Why it Matters:

Companies on the sell-side of the financial industry seek to derive value by carefully researching stocks to fit their clients' individual investment strategies and by directly purchasing the securities off of the markets.

Buy side and sell side firms are the direct participants of every trade made on an exchange.

Related Terms View All
  • Taking the Street
    Let's say John Doe has a Gordon Gekko complex and wants to make some money by...
  • Value Averaging
    Let's assume John Doe has $5,000 in his new-car account. He wants that to grow to $10,000...
  • Junior Capital Pool (JCP)
    Let's say Company XYZ has a new design for widgets. It has not produced anything beyond a...
  • Enrolled Agent (EA)
    To become an EA, a person has to pass a three-part comprehensive IRS test of individual...
  • Qualified Distribution
    A qualified distribution must meet two main requirements. First, it must occur at least...