A broker is a person or firm who arranges transactions between a
buyer and a
seller for a
commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a
principal party to the deal. Neither role should be confused with that of an
agent
Agent may refer to:
Espionage, investigation, and law
*, spies or intelligence officers
* Law of agency, laws involving a person authorized to act on behalf of another
** Agent of record, a person with a contractual agreement with an insuranc ...
—one who acts on behalf of a principal party in a deal.
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Definition
A broker is an independent party whose services are used extensively in some industries. A broker's prime responsibility is to bring sellers and buyers together and thus a broker is the third-person facilitator between a buyer and a seller. An example would be a real estate or stock broker who facilitates the sale of a property.[
Brokers can furnish ]market research
Market research is an organized effort to gather information about target markets and customers: know about them, starting with who they are. It is an important component of business strategy and a major factor in maintaining competitiveness. Ma ...
and market data. Brokers may represent either the seller or the buyer but generally not both at the same time. Brokers are expected to have the tools and resources to reach the largest possible base of buyers and sellers. They then screen these potential buyers or sellers for the perfect match. An individual producer, on the other hand, especially one new in the market, probably will not have the same access to customers as a broker. Another benefit of using a broker is cost—they might be cheaper in smaller markets, with smaller accounts, or with a limited line of products.broker-dealer
In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...
is a broker that transacts for its own account, in addition to facilitating transactions for clients.
Brokerage firms are generally subject to regulations based on the type of brokerage and jurisdictions in which they operate. Examples of brokerage firm regulatory agencies include the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority
The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associat ...
(FINRA), which regulate stockbroker
A stockbroker is a regulated broker, broker-dealer, or registered investment adviser (in the United States) who may provide financial advisory and investment management services and execute transactions such as the purchase or sale of stock ...
s in the United States.
Etymology
The word "broker" derives from Old French
Old French (, , ; Modern French: ) was the language spoken in most of the northern half of France from approximately the 8th to the 14th centuries. Rather than a unified language, Old French was a linkage of Romance dialects, mutually intel ...
''broceur'' "small trader", of uncertain origin, but possibly from Old French ''brocheor'' meaning "wine retailer", which comes from the verb ''brochier'', or "to broach (a keg)".
Types of brokers
* Automobile broker
* Broker-dealer
In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...
* Business broker
* Shipping agency
* Auto transport broker
An auto transport broker is a type of cargo broker that specializes in the shipping and transportation of vehicles. Most vehicles shipped in the U.S. are cars and trucks, but many brokers handle boats, RVs, motorcycles and other types of vehicle ...
* Commodity broker
* Corredor Público
A Corredor Público is a legal professional in Mexico with specific functions in the field of commerce. The main purpose of a Corredor Publico is to broker transactions between merchants. The position was redefined via legislation on December ...
* Customs broker
* Freight broker
* Information broker (data broker)
* Insurance broker
An insurance broker is an intermediary who sells, solicits, or negotiates insurance on behalf of a client for compensation. An insurance broker is distinct from an insurance agent in that a broker typically acts on behalf of a client by negotia ...
* Intellectual property broker
* Joint venture broker
* List broker
* Matchmaking
* Message broker
* Mortgage broker
* Pawnbroker
A pawnbroker is an individual or business (pawnshop or pawn shop) that offers secured loans to people, with items of personal property used as collateral. The items having been ''pawned'' to the broker are themselves called ''pledges'' o ...
* Power broker (term)
* Prime brokerage
* Real estate broker
A real estate agent or real estate broker is a person who represents sellers or buyers of real estate or real property. While a broker may work independently, an agent usually works under a licensed broker to represent clients. Brokers and ag ...
* Shipbroking
* Sponsorship broker
* Stockbroker
A stockbroker is a regulated broker, broker-dealer, or registered investment adviser (in the United States) who may provide financial advisory and investment management services and execute transactions such as the purchase or sale of stock ...
* Office broker
An office broker is a more general term for a serviced office broker. The office broker company/ individual arranges transactions between a company or individual interested in renting office space and a business centre/ office space owner. Office ...
* Yacht broker A yacht broker is a specialist who serves yacht or boat sellers and/or buyers as a representative for the sale or purchase of a yacht or boat. The yacht broker is paid an agreed commission by the seller to market the yacht for sale, field interest ...
References
Further reading
* Ronald S. Burt. 2004. “Structural Holes and Good Ideas.” ''American Journal of Sociology'', Vol. 110, No. 2, pp. 349-399
External links
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{{Authority control
Financial services occupations