Stock Broker

A stock broker is perhaps one of the most important institutions in the stock market. Although there are a number of roles that stock brokers play, one can say that the key role is to buy and sell stocks on behalf of investors.  Actually, stock brokers do charge a given amount of fees to investors in order to do the trading on their behalf. Stock brokers may be large firms, called stock brokerage firms, or just professional individuals licensed to do that kind of business in the market. Depending on the type of license held by these firms and individuals, stock brokers can have many other roles to perform, including financial consultancy and credit provider.

Various countries have varying regulations and principles governing how stock broker’s operate. Most of the rules are quite intricate and may not be well understood by investors. However there are some umbrella regulations that usually apply to most stock markets in the world. In nearly all stock markets in the world, one cannot participate in the market without a broker, which means that for you to trade in the market, it is inevitable that you will at some point hire a stock broker.

Every country requires an individual to pass some tests in order for them to be registered as stock brokers.  For example, in the US, one has to sit and pass the general Securities representative exam provided by the regulatory body known as FINRA. FINRA stands for Financial Industry Regulatory Authority.  The content of these passage exams differ from country to country just like the overall rules for the stock markets.  Therefore, a stock broker can only operate in the specific stock market where they have been certified and duly registered. Even the most prolific stock brokerage firms in one country may not be recognized in another unless they go through the due process set by that country’s authority.

Perhaps it is worth noting that the stock brokerage business in the world has evolved a great deal in the last two decades or so. A few years ago, accessing a broker was quite an ordeal, especially for people who were not rich. Initial charges were too high for the average person, making the stock market to look like a rich man’s business. Periodic payments to stockbrokers were also quite high, and people feared they could lose all their gains to such payments. But the internet has revolutionalized the business in a very interesting way. For starters, access to brokers has been a lot easier. Brokers now have websites where you can register and start trading online without the need for much paperwork.

Reduced paperwork as well as reduced initial minimums has made it a lot easier for people to understand and to trade in the stock market.  As a result, a new kind of market for stock brokers has been established, involving smaller-scale investors with less capital than the traditional investors. This has compelled brokers to further reduce their rates and to simplify their terms in order to tap that growing market.