Quite similar to what the names suggest, the sell side refers to those in the investment banking industry who help raise equity and debt capital by selling those securities in various forms to the buyers, on behalf of the companies. They primarily are involved in marketing and selling securities in the stock market.
The buy side, on the other hand, consists of investors and other professionals interested in investment and have the money and capacity to do so. These securities can be bought in any form, be it shares, preference shares, bonds, or any other form of financial investment in the stock market.
Difference between buy side and sell side in the stock market
| Basis | Buy side | Sell side |
| Definition of the analysts | The primary and the most important job of a buy-side analyst is to recommend the best stocks to buy through thorough research that would ultimately give their clients the best returns. | Sell-side analysts typically carry out research on the client’s sector and create models to forecast the firm’s financial performance after consulting with customers, suppliers, rivals, and other industry experts. |
| Compensation of the analysts | When talking of compensation, buy-side analysts at successful funds are often paid a lot as their job requires a higher skill set. Even though it is quite a high-pressure job, being a buy-side analyst has its own advantages. | Sell-side analysts often get paid for the large amount of information that they gather through access to management, but are often on the field and work for longer hours than their buy side counterparts. |
| The structure of hierarchy | There are primarily three positions and the chain of hierarchy is much shorter. It usually includes three roles i.e., Portfolio Manager, Researcher, and Marketing Head. | The hierarchy is higher here as the number of roles associated is far more than the buy side. There is a definite hierarchy consisting of roles like Analysts, Associates, and VP directly under the MD or the Chairman. |
| Number of analysts | The number of analysts is lower. | The number of analysts is higher in comparison with the sell side. |
Summing it up
Though the primary responsibility of both roles includes assessing the stock market, giving valuable recommendations on stocks to buy today, and the situation of the stock market today, there are many differences between the roles.
No matter what your investment requirement, it is prudent to reach out to a financial expert and explore investment options that are in line with your goals and appetite for risk.
