Texas Business Law · Glossary

Broker-Dealer

A person or entity engaged in the business of buying or selling securities for the account of others (broker) or for their own account (dealer); registration with the SEC and FINRA is generally required.

By Charles R. Kraus

Partner, Scale LLP

A broker-dealer is a person or entity in the business of buying or selling securities. The "broker" function is acting as agent for the account of customers; the "dealer" function is buying and selling securities for one's own account. Most firms perform both functions and are referred to simply as broker-dealers.

Authority

The Securities Exchange Act of 1934 § 3(a)(4)-(5) (15 U.S.C. § 78c) defines "broker" and "dealer." Section 15(a) requires registration with the Securities and Exchange Commission. SEC Rule 15a-6 governs the limited circumstances in which foreign broker-dealers may transact with U.S. persons without full registration. The Financial Industry Regulatory Authority (FINRA) is the primary self-regulatory organization for U.S. broker-dealers; FINRA Rules 1010-1014 govern member registration.

Texas requirements

Broker-dealers transacting in Texas must register or qualify for an exemption under the Texas Securities Act, recodified effective January 1, 2022 at Tex. Gov't Code Chapters 4001-4008. The State Securities Board administers Texas registration. The Texas dealer registration requirement is in addition to federal SEC registration; sales and dealer-conduct rules are administered jointly between FINRA and state regulators.

Last updated: August 14, 2026