When a broker-dealer buys a security from a market maker for a customer, what role does it serve?

In the scenario where a broker-dealer buys a security from a market maker for a customer, the broker-dealer is acting in the role of an agent.

As an agent, the broker-dealer facilitates transactions on behalf of its clients, executing trades for their account. The broker-dealer does not take ownership of the securities in this process; instead, it acts to find and secure the best execution for the customer's order by sourcing the security from the market maker. The agent’s primary responsibility is to serve the interests of their customer, ensuring that they obtain the desired security at the best possible price.

In contrast, if the broker-dealer were acting as a principal, it would be purchasing securities for its own account, taking on the risk of ownership and possibly holding the securities for resale. Being an underwriter involves raising capital for issuers by selling securities, which is a different function. Therefore, in this context, the broker-dealer's role of executing a trade on behalf of a customer clearly aligns with that of an agent.