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Glossary

Broker

Category — Market Participants
In general, a broker is a legal entity or a private person who is an intermediary between a seller and a buyer in a market.
In the securities market, a broker is a licensed sales representative who trades securities, including on behalf of an investor.
Brokers can be either banks (for example: JP Morgan, HSBC) and individual financial organizations (for example: Exante, BCS ).
A contract is mandatory between a broker and a client, which specifies the terms of their cooperation. For its activities, the broker receives a commission, the amount of which, as a rule, is a certain percentage of the transaction amount. The amount of the commission may vary, including depending on the amount of the transaction and the frequency of the client’s transactions.

The activity of a broker is necessary due to the fact that individuals or legal entities that do not own the appropriate license can make transactions for the purchase or sale of securities, currencies and other exchange-traded assets only with the help of a broker who is registered on the exchange and has a license to practice. In some cases, the broker manages the client’s money capital, taking into account his orders and agreements, enshrined in the contract.

The main elements of a broker’s activity are:
• opening a trading account for a client;
• receiving from the client an application for the sale or purchase of currency / securities, taking into account such parameters as price, quantity, delivery time;
• carrying out this transaction on the exchange;
• transfer of funds received (minus the agreed commission) to the client’s account;
• market analysis, forecasting the movement of asset prices;
• consulting on the securities market, checking documentation for compliance with the requirements of the law;
• reporting on the completed transactions.
Terms from the same category