Broker

A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confused with that of an agent—one who acts on behalf of a principal party in a deal.[1]

For other uses, see Broker (disambiguation).
"Brokerage" redirects here. For the not-for-profit organization "the Brokerage", see The Brokerage Citylink.

Definition

A broker is an independent party, whose services are used extensively in some industries. A broker's prime responsibility is to bring sellers and buyers together and thus a broker is the third-person facilitator between a buyer and a seller. An example would be a real estate or stock broker who facilitates the sale of a property.[1]

Brokers can furnish market research and market data. Brokers may represent either the seller or the buyer but generally not both at the same time. Brokers are almost always necessary for the purchase and sale of financial instruments. Brokers are expected to have the tools and resources to reach the largest possible base of buyers and sellers. They then screen these potential buyers or sellers for the perfect match. An individual producer, on the other hand, especially one new in the market, probably will not have the same access to customers as a broker. Another benefit of using a broker is cost—they might be cheaper in smaller markets, with smaller accounts, or with a limited line of products.[1]

Some types of brokers, such as real estate brokers, often have strict state requirements for using the term, while others, such as aircraft brokers, typically have no formal licensing or training requirements.

Some brokers, known as discount brokers, charge smaller commission, sometimes in exchange for offering less advice or services than full service brokerage firms.[2]

A broker-dealer is a broker that transacts for its own account, in addition to facilitating transactions for clients.[3]

Brokerage firms are generally subject to regulations based on the type of brokerage and jurisdictions in which they operate. Examples of brokerage firm regulatory agencies include the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA), which regulate stockbrokers in the United States.

Etymology

The word "broker" derives from Old French broceur "small trader", of uncertain origin, but possibly from Old French brocheor meaning "wine retailer", which comes from the verb brochier, or "to broach (a keg)".[4]

Types of brokers
gollark: How would "going indoors" make you untargetable?
gollark: How?
gollark: How would that help?
gollark: Well, enjoy, I have orbital laser tech there.
gollark: Another CC server.

References
  1. Spiro, Rosann L.; Stanton, William J.; Rich, Gregory A. (2003). Management of a Sales Force. 12th ed. McGraw-Hill/Irwin.
  2. "What is a Discount Broker?". Investopedia. March 5, 2019.
  3. JOHNSTON, KEVIN B. (February 23, 2019). "Top 15 Broker-Dealer Firms in 2018". Investopedia.
  4. Harper, Douglas. "broker". Online Etymology Dictionary. Retrieved 2010-04-10.

Media related to Brokers at Wikimedia Commons

This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.