Friday, January 30, 2009

financial jargon: buy-side, sell-side

http://en.wikipedia.org/wiki/Buy_side:

The split between the Buy and Sell sides should be viewed from the perspective of securities exchange services. The investing community must use those services to trade securities. The "Buy Side" are the buyers of those services; the "Sell Side" are the sellers of those services.

Sell side brokerages are registered members of a stock exchange, and required to be market makers in a given security. Buy side firms usually take speculative positions or make relative value trades. Buy side firms participate in a smaller number of overall transactions, and aim to profit from market movements and accruals rather than through risk management and the bid-offer spread.

In Short the entity paying the commission on trade would be a buy side and the one receiving it is a sell side.

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