A stockbroker is an important component of the entire trading system. A stockbroker can be defined as an agent whose main function is to represent clients during the buying and selling of stocks or other securities.
For most investors, brokers are the people they would call when they wish to invest or trade in stocks.
The term stockbroker can be applied to both individuals as well as brokerage firms. These firms are companies dealing in securities. The employees of the firm are its registered representatives who work for the brokerage firm.
The role of the stockbroker in trading:
The stockbroker can have an important role to play in a particular trade’s success or failure.
The role of the broker is to represent the client and seek the best deals when it comes to buying or selling of stocks. Some brokers may also advise the client about the right time to buy or sell a stock or even about market activity. It is always desirable to have the advice of an efficient broker.
When handling a trade, the broker would take an order from the client about whether to buy or sell the stock. The broker then passes this information to a floor trader through the network of the brokerage firm.
When the transaction is completed as desired by the client, the broker informs the client. Then arrangements are made to complete the necessary paperwork such as transferring any stock certificates as required.
Brokers are the middlemen between an investor and the securities, which trade on the market. Whenever an investor trades, the broker receives a commission. Though the exact commissions and pay may vary, the commission is usually a percentage of the total value of the trade.
- Registration and Tests:
Most countries have regulations in place regarding the licensing requirements of brokers. They would have to pass certain examinations as specified by the regulatory authority.
Some countries may also require the broker to complete the registration process with the help of a brokerage firm. These procedures are necessary to ensure that the broker is well versed with all the laws and regulations of the trading industry.
In addition to this, some brokerage firms may also require that the broker has some prior work experience for a specific period of time.
While some believe that online trading with its software and robots have reduced the importance of brokers, it is not entirely true. One such resource is Fintech Ltd. This software is one of the latest entrants in the field of binary options trading and has seen a fair share of controversy. You can read the complete Fintech Limited review here.
The role of a stockbroker has some great career prospects and there is an expected increase in the job opportunities in this sector.