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An individual who is paid a commission for executing customer orders. Either a floor broker who executes orders on the floor of the exchange, or an upstairs broker who handles retail customers and their orders. Also, person who acts as an intermediary between a buyer and seller, usually charging a commission. A "broker" who specializes in stocks, bonds, commodities, or options acts as an agent and must be registered with the exchange where the securities are traded. Antithesis of dealer.


A person or firm that conducts transactions on behalf of a client. Some brokers only conduct transactions while others also offer different types of investment advisory services. Brokers derive their profit from commissions on orders given. That is, they usually collect a percentage of the value of each transaction, though some charge flat fees. Clients may give orders in a variety of ways. One may meet with a broker, call on the telephone, or give orders over the Internet. Brokers handle two main types of brokerage accounts: advisory accounts and discretionary accounts. Brokers are only allowed to conduct transactions on advisory accounts on the specific orders of the account holder, or under very specific instructions. On the other hand, they have much more leeway over discretionary accounts, conducting transactions not prohibited by the account holder in accordance with the holder's investment goals and the prudent man rule. In practice, most brokerage firms are in fact broker-dealer firms. Most brokers must register with the SEC.


1. An individual or a firm that brings together buyers and sellers but does not take a position in the asset to be exchanged. Some observers believe a broker provides an unbiased opinion on a security since there is little self-interest involved in the transaction. Compare dealer.
What should I look for in a broker?

When interviewing prospective brokers, you should look for one with a clean NASD record, great referrals, and stability in his or her business. In addition, he or she should not be transaction oriented but should instead be concerned about your values and goals and be willing to realize that the best trade may be no trade. In summary, you should look for a financial advisor rather than just a "broker."

George Riles, First Vice President and Resident Manager, Merrill Lynch, Albany, GA


A broker acts as an agent or intermediary for a buyer and a seller. The buyer, seller, and broker may all be individuals, or one or more may be a business or other institution.

For example, a stockbroker works for a brokerage firm, and handles client orders to buy or sell stocks, bonds, commodities, and options in return for a commission or asset-based fee.

Stockbrokers must pass a uniform examination administered by the NASD and must register with the Securities and Exchange Commission (SEC).

A floor broker handles buy and sell orders on the floor of a securities or commodities exchange. A real estate broker represents the seller in a real estate transaction and receives a commission on the sale.

If as a real estate buyer you hire someone to represent your interests, that person is known as a buyer's agent. A mortgage or insurance broker acts as an intermediary in finding a mortgage or insurance policy for his or her client and also receives a commission.


a business such as a stockbroker, insurance broker, commodity broker, which acts as a market intermediary in bringing together buyers and sellers of a financial asset, financial service or commodity See AGENT, TRADER/DEALER, STOCK MARKET, COMMODITY MARKET, INSURANCE.


An agent employed to make bargains and contracts for compensation. In the real estate industry, a broker does not make contracts and bind his or her principal but,instead,acts as an intermediary between buyers and sellers.

• The broker-in-charge or qualifying broker in an office is responsible for setting office poli- cies, supervising agents in the execution of their legal responsibilities, and complying with all regulatory requirements. All contracts with consumers are with the broker, who is the only one legally permitted to enter into such relationships. The broker may then delegate some responsibilities to agents or other licensed salespersons, but does not thereby relieve himself or herself of liability.

• Brokers have fiduciary responsibilities to their principals, called clients. They must exercise honesty, integrity, care, and skill in carrying out their duties. All other persons, called customers, are owed the duty of honesty.

• The broker must submit all written offers to the principal as soon as received and may not hold any offer while waiting for a more attractive one.

• All earnest monies coming into the possession of the broker must be deposited into an escrow account as soon as possible according to the instructions of the offer, but it may hold a check, undeposited, in a file if the offer states the check may not be deposited until the offer is accepted.

• All client monies, such as from property management activities, must be maintained in an escrow account and cannot be comingled with the broker's other funds.

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