What is the primary function of dealers in the OTC NASDAQ market?

The primary function of dealers in the OTC NASDAQ market is to act as market makers. Market makers maintain liquidity in the market by being ready to buy and sell securities at any time, which helps ensure that there is always a market for those securities. They do this by holding an inventory of stocks and quoting prices at which they are willing to buy and sell, thereby providing a continuous flow of trading activity. This role is essential in the OTC market where there is no centralized exchange, making it crucial for price discovery and efficient trading.

In contrast, centralized trading locations are characteristic of traditional exchanges rather than the OTC market. Commission brokers primarily focus on executing orders on behalf of clients rather than holding inventory and facilitating trades. Finally, the role of dealers is not limited to facilitating stock purchases only; they also facilitate sales, which is integral to maintaining market liquidity and efficiency.