DEFINITION of 'Interdealer Market'

A trading market that is typically only accessible by banks and financial institutions. The interdealer market is an over-the-counter market that is not restricted to a physical location; rather, it is a global market where representatives of banks and financial institutions execute trades through their trading terminals.

BREAKING DOWN 'Interdealer Market'

The foreign exchange interdealer market is one of the better-known interdealer markets and is characterized by large transaction sizes and tight bid/ask spreads. Currency transactions in the interdealer market can be either speculative - initiated with the sole intention of profiting from a currency move - or customer-driven (by an institution's corporate clients such as exporters and importers, for example).

RELATED TERMS
  1. Inter-Dealer Broker

    1. A brokerage firm operating in the bond or OTC derivatives ...
  2. Interdealer Quotation System

    The exchange system comprised of the Nasdaq (National Association ...
  3. SEC Form 10-C

    A form filed with the Securities and Exchange Commission (SEC) ...
  4. General Collateral Financing Trades ...

    A type of repurchase agreement which is executed without the ...
  5. Over-The-Counter Market

    A decentralized market, without a central physical location, ...
  6. Workable Indication

    A nominal quote in the municipal bond market at which price a ...
Related Articles
  1. Small Business

    How Equity Capital Markets Work

    An equity capital market is a market existing between companies and financial institutions that raises money for the companies.
  2. Investing

    Institutional Investors And Fundamentals: What's The Link?

    Big-money sponsorship might make a company look good, but it's not always a reliable gauge of stock quality.
  3. Trading

    The Forex Market: Who Trades Currency And Why

    The forex market has a lot of unique attributes that may come as a surprise for new traders.
  4. Trading

    What is the Difference Between Institutional Traders and Retail Traders?

    The differences between retail and institutional traders lie in the size of the trade, level of sophistication, and the speed of transactions.
  5. Investing

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  6. Trading

    The Currency Market Information Edge

    Unique features of the forex market may allow larger players to get a jump on smaller ones.
  7. Personal Finance

    What is a Financial Institution?

    A financial institution is in business to, among other things, accept deposits, make loans, exchange currencies, and broker investment securities.
  8. Investing

    Introduction To Institutional Investing

    Investopedia explains: Learn about institutional investing and all of the major players in this field.
  9. Investing

    The Pros And Cons Of Institutional Ownership

    These big players can both create and destroy value for shareholders.
  10. Investing

    iShares Silver Trust ETF: Who Is Invested? (SLV)

    Discover the top institutional owners of the iShares Silver Trust exchange-traded fund (ETF), their exact ownership and their recent position adjustments.
RELATED FAQS
  1. Does all common stock trade on exchanges?

    Find out about types of common stock that trade on stock exchanges and types that trade in varied over-the-counter (OTC) ... Read Answer >>
  2. What are the major categories of financial institutions and what are their primary ...

    Understand the various types of financial institutions that exist in today's economy, and learn the purpose each serves in ... Read Answer >>
  3. What's the difference between a capital market and the stock market?

    Learn about the differences between stock market and capital market. Identify several important stock markets and understand ... Read Answer >>
  4. How do I find out my bank's bid-ask spread for currency conversions?

    Learn how to find your bank's bid-ask spreads for currency conversions, and understand why you should consider alternative ... Read Answer >>
  5. What role does a correspondent bank play in an international transaction?

    Understand what a correspondent bank is and how it operates to facilitate currency exchange and financial transactions between ... Read Answer >>
Trading Center