What does SDB mean in UNCLASSIFIED

Seller Dealer Buyer (SDB) is a type of financial transaction where a financial intermediary, known as a dealer, facilitates the sale and purchase of securities between two parties: the seller and the buyer. The dealer acts as a market maker, providing liquidity and facilitating the efficient execution of trades.

In an SDB transaction, the seller offers a block of securities for sale to the dealer. The dealer then finds a buyer for the securities and facilitates the transaction between the two parties. The dealer may act as a principal, buying the securities from the seller and selling them to the buyer, or as an agent, facilitating the trade without taking ownership of the securities.

Using an SDB offers several benefits, including:

• Liquidity: The dealer provides liquidity by maintaining an inventory of securities, allowing for the quick and efficient execution of trades.
• Price discovery: The dealer plays a role in price discovery by providing quotes to both the buyer and seller, helping to establish a fair market price.
• Execution efficiency: The dealer's expertise and infrastructure enable them to execute trades efficiently, minimizing transaction costs and delays.

While SDBs can be beneficial, there are also risks to consider:

• Market volatility: The value of securities can fluctuate, leading to potential losses for the buyer or seller.
• Counterparty risk: The SDB carries the risk that one of the parties may default on their obligations, resulting in financial losses.
• Regulatory risk: SDB transactions may be subject to regulatory oversight, which could impact the terms and costs of the trade.