Dealer
The AMC fund management sub-team responsible for placing orders with securities brokers on the instructions of the fund managers — the execution arm, not the decision-making one.
In plain language
An Asset Management Company's fund management team splits into three roles.
Analysts study the market and hunt for ideas. Fund managers pick what to buy and what to sell. Then there is the dealer. The dealer does neither of those things. The dealer's only job is to place the order with a broker, once a fund manager has decided what to trade.
How it works
The fund management team is normally broken into three sub-teams:
- Analysts — analyse individual securities, sectors, markets or the economy, across equity or debt, to identify investment opportunities.
- Fund managers — evaluate the opportunities presented by analysts, brokers and other research, and may also identify opportunities themselves; the performance of the scheme is the fund manager's responsibility.
- Dealers — execute. Once a fund manager decides to buy or sell a security, the dealer is the one who places the order with a securities broker to get the trade done.
The separation matters for control: the person who decides what to trade (the fund manager) is not the same person who executes the trade (the dealer), which is part of how an AMC keeps its investment process auditable and its execution function separate from its decision-making function.
A worked example
At Girivan Asset Management Company, the fund manager for the flexi cap scheme decides, after reviewing an analyst's report, to buy 2 lakh shares of a listed auto components company at a price not exceeding Rs 340.
The fund manager does not call a broker directly. Instead, the instruction — buy up to 2,00,000 shares, price cap Rs 340 — goes to the scheme's dealer, who works the order across one or more empanelled brokers, watching the market through the trading day to get the best achievable execution within that price cap, and confirms the filled quantity back to the fund manager once the order is complete.
If the dealer instead started deciding which stocks to buy on their own initiative, that would blur a separation of duties the AMC's organisation structure is specifically built to maintain.
Why NISM asks about it
Chapter 3, section 3.3.2 (Fund management), in the description of an AMC's internal organisation structure — analysts, fund managers, dealers, and the wider operations, customer service and sales teams around them. Expect a question distinguishing the dealer's execution role from the fund manager's decision-making role.
Common exam traps
- The dealer executes; the fund manager decides. A question describing someone who places orders with brokers on instruction is describing a dealer, not a fund manager, however senior that person is.
- Scheme performance is the fund manager's responsibility, not the dealer's — do not attribute investment outcomes to the execution function.
- Do not confuse an AMC's internal dealer with a stockbroker or trading member of an exchange — the dealer is an AMC employee instructing brokers, not a member of the exchange executing trades in the market directly.
Where this is taught
- Series V-A · Chapter 3: Legal Structure of Mutual Funds in Indiaintroduced here
- Series VIII · Chapter 6: Trading Mechanismintroduced here
Related terms
- Asset Management CompanyThe company that runs a mutual fund's schemes day to day — appointed by the sponsor or trustees with SEBI's approval, and paid a fee out of the scheme rather than a share of its profits.
- Risk Management FrameworkSEBI's requirement that every AMC run risk management as an independent, specialised function, with dedicated risk officers for investment, compliance, operational and cyber security risk.