What is Stock Broker with Examples?

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An individual who works in the securities market and acts on behalf of investors is known as a stock broker. The bulk of their work is taking and fulfilling orders to buy and sell goods. Investors in the stock market and other financial markets rely on their own knowledge and experience when making financial decisions. Individuals interested in the stock market can either get into business for themselves or join an established brokerage firm.

You can become a broker by working at a brokerage or registering with a recognized stock exchange like BSE. These brokers may add a markup, commission, or both to the price you pay. The commission varies greatly depending on the broker. There are brokers that charge a fixed rate, and there are others that take a percentage of the value of the securities exchanged. The modest fees charged by this group of brokers have helped to make investing in the security market more accessible to consumers who do not work in the industry. Traditional brokers don’t require extensive market knowledge or rigorous exams, unlike cheaper brokers.

The majority of stockbrokers are employed by brokerage firms and work with both retail and institutional investors. While commission is the standard method of compensation for stockbrokers, brokers’ earnings potential varies depending on their employer. The term “stockbrokers” can also be used to refer to broker-dealer and brokerage firms more generally. Both full-service brokers and bargain brokers fit this category; they facilitate trades but don’t offer individualised investment guidance. To further explore the topic of what are bonds in stock market, keep reading.

What is Stock Broker?

An individual who holds a licence to act as a stockbroker is authorised to trade on behalf of clients. Stockbrokers are subject to regulation by the Securities and Exchange Commission (SEC). Brokers and dealer firms are where most stockbrokers find employment. Brokers earn commissions based on the trades they handle.

Understanding Stock Broker

There are two primary categories of stock broker: full-service and discount. The former sell a variety of financial products and services, such as stocks, bonds, annuities, and insurance. Merrill Lynch and Morgan Stanley are two of the top full-service brokerages available. When compared to full-service brokers, discount brokers offer less services yet conduct more trades. Stock brokerage firms like Charles Schwab and Fidelity are examples of discount brokerages.

Brokers need to pass the General Securities Representative Exam, often known as the Series 7 exam, administered by FINRA in order to become registered representatives. They can sell stocks, bonds, options, and other securities like call and put options, but not commodities, futures, life insurance, or real estate without a different licence. After the exam, they find work with a broker-dealer. In some states, stock broker need the Series 63 license, which involves the Uniform Securities Agent Exam. The exam assesses state laws, regulations, ethics, and fiduciary duty. When it comes to the services they may provide for their clients, many stockbrokers opt to obtain additional licences.

Example of Stock Broker

Their staff includes both full-service and bargain brokers. The finest full-service brokers get a commission of up to 40 percent of the costs their clients pay, while the brokerage keeps the remaining 60 percent. Less successful brokers receive 35%-25% of the pie.

Stockbrokers may pay more attention to clients with larger brokerage balances. When dealing with full-service organisations, brokers give a lot more attention to the wealthier clients’ accounts. Discount brokerages typically defer to their customers’ investment expertise and conduct just the trades requested by their customers.

Role of Stock Broker

To trade equities, you need to join a major exchange like the New York Stock Exchange (NYSE) or the National Association of Securities Dealers (NASD). To participate in trading on these exchanges, you must either be a member of the exchange or an employee of a firm that is a member. Many brokers and broker-dealers get their licences from the Financial Industry Regulatory Authority, which is an organisation that regulates the industry as a whole (FINRA).

While it is possible for private investors to purchase stock shares directly from a corporation, the process is simplified when working with a stockbroker. Most people couldn’t afford to put money into the stock market until lately. Only wealthy individuals or large institutions might justify the costs, such as pension fund administrators. They employed the services of full-service brokers, which meant that each trade may cost several hundred dollars.

However, with the advent of the internet and other technological advancements, discount brokers are now able to provide investors with low-cost, quick, and automated access to the markets over the web. Micro-investors now have a leg up, thanks to apps like Robinhood and SoFi, which make it possible to acquire shares in increments as low as $5. These days, most investors use cheap brokers who hold their accounts and let them manage their investments independently.

Various Types of Stock Brokers

Financial experts that assist customers in making market trades are known as stockbrokers. A stock broker may also be known as a registered representative (RR) or an investment advisor. Types of Stock Brokers (and What They Do)


These stock brokers don’t work for any other investors and instead trade for themselves. They are prohibited from engaging in fictitious business activities or imposing fees on third parties. They provide the buy price and the selling price for each stock.

The profit is the difference between the two prices. Stock broker play a crucial role in the financial markets, connecting investors with opportunities to invest in stocks, bonds, and other assets.


This stockbroker cabal is infamous for “shorting” markets – buying cheaply on one exchange and selling lucratively on another. “Arbitrage” exploits small price differences across markets by simultaneous buying and selling of the same asset.

Full-time Stockbrokers

The services and products provided by this broker are extensive. Stock trading, financial planning, retirement savings management, investment portfolio administration, capital gains tax preparation, and similar services fall under this category. Although full-time stockbrokers’ high commissions may not be reasonable for some investors, the variety of services they provide may be.

As mentioned, these brokers gain stock market expertise through intensive training and testing for industry roles. For this reason, they have the education and experience to put bids on your behalf and lead your portfolio in the direction that will generate the maximum profit with the least amount of risk.

Discount Brokers

The majority of brokers function as discount or online services. They’re not just inexpensive, but convenient for the everyday individual to use whenever and whenever they like. There is no need for traders to physically meet with discount brokers. Investors now have the option of putting their money into online platforms.

However, not all cheap brokers are as knowledgeable as regular brokers, making them a less desirable option for corporations and individuals with substantial investment capital and a high tolerance for risk. Voice brokers work for discount broker firms by answering short inquiries over the phone, whereas branch officers operate in a physical location. They might also interact with customers who are part of the online broker’s highest subscription tiers.

How to Become a Stockbroker?

A bachelor’s degree in finance or business administration is usually required for a career as a stock broker. Knowledge of financial laws and norms, accounting practises, basic economics and currency concepts, as well as planning and forecasting techniques, is useful for a career in this industry.

Additionally, international credentials are increasingly sought after as a mark of credibility and competence in the financial sector. One example is the Certified Financial Planner (CFP), while another is the Chartered Financial Analyst (CFA).

Compare Discount Brokers with Full-Service Brokers

Historically, a full-service broker provided a wider range of financial services, including research, counselling, portfolio management, and more, whereas a discount broker just assisted clients with buying and selling. As online brokerages have driven commissions to zero, cheap brokers have differentiated themselves by providing more than just execution, such as research and other services.


The proliferation of online stock brokers and investment platforms demonstrates the Internet’s profound impact on the stock market. Before the advent of discount brokerage services, only the very wealthy could afford to participate in the stock market due of the hefty costs charged by full-time brokers. However, as both the stock market and share stockbrokers have become more accessible over the web, trading on the stock market has become more simpler to utilize.

Stockbrokers mediate between buyers and sellers on stock exchanges and other markets. Brokers accept client orders and seek to fill them at the most favorable market price. They receive commissions for their efforts. Because online brokerage platforms let consumers make their own orders over the web or a mobile app, many stockbrokers are now financial planners or counselors.

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