When ABC Broker-Dealer is conducting transactions with customers using its own inventory of shares, it is acting as which type of entity?

ABC Broker-Dealer is acting as a market maker when it conducts transactions with customers using its own inventory of shares. Market makers are firms or individuals that actively buy and sell securities on their own account, providing liquidity to the market by being ready to buy or sell shares at any time. By using its own inventory, ABC Broker-Dealer is facilitating trades directly with customers, taking on the risk associated with holding the shares.

In this role, the broker-dealer benefits from the difference between the bid and ask prices of the securities, which can lead to profitability if the market conditions are favorable. This position differs from that of an agent or broker, who would typically match buyers and sellers without holding inventory, thereby not taking on the same level of risk or providing liquidity. Additionally, a transfer agent is responsible for maintaining records of ownership and handling the transfer of shares but does not engage in the buying and selling of shares in the same capacity as a market maker.

Thus, ABC Broker-Dealer fulfilling its role by using its own inventory clearly defines it as a market maker in the context of this question.