What is the role of a broker-dealer in the securities industry?

A broker-dealer serves a crucial role in the securities industry by buying and selling securities on behalf of customers. This function includes executing trades for individual investors and institutional clients, facilitating the smooth operation of the financial markets. Broker-dealers act as intermediaries between buyers and sellers of securities, providing liquidity and ensuring that transactions are completed efficiently.

In addition to executing customer trades, broker-dealers may also engage in proprietary trading, where they buy and sell securities for their own accounts. This dual role helps them to maintain active operations within the market and often enables them to provide better pricing and execution for their customers.

The other options describe different aspects of the financial industry but do not encapsulate the primary function of broker-dealers. While managing mutual funds is a distinct activity that involves pooling investor money to purchase a diversified portfolio of securities, it is not exclusive to broker-dealers. Issuing new securities pertains to the role of investment banks and underwriters during the initial public offerings (IPOs) process. Acting solely as an advisor refers to investment advisory roles, which typically do not involve trading securities on behalf of clients, emphasizing a more consultative approach rather than an execution-oriented service.