When a broker-dealer is acting in the capacity of a dealer and buying or selling for its own account, the firm is acting as a(n):

When a broker-dealer acts in the capacity of a dealer and engages in buying or selling for its own account, it is functioning as a principal. This means that the broker-dealer is trading securities as the owner of the securities rather than facilitating a transaction for a client. In this role, the firm risks its own capital and stands to gain or lose based on the performance of the securities involved in the transaction.

This principal role is essential in providing liquidity to the markets, as broker-dealers are able to take immediate positions in securities, which can help satisfy the demands of buyers and sellers. In contrast, roles such as agent or broker involve acting on behalf of clients, which does not entail trading from the firm's own account and does not carry that level of direct financial risk. Being an intermediary is a broader term that can encompass various functions within the trading process but does not specifically define the actions undertaken when trading from a proprietary account.