A broker is a person or entity that arranges transactions between a

buyer Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual o ...

and a

seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred ...

. This may be done for a

commission In-Commission or commissioning may refer to: Business and contracting * Commission (remuneration), a form of payment to an agent for services rendered ** Commission (art), the purchase or the creation of a piece of art most often on behalf of anot ...

when the deal is executed. A broker who also acts as a seller or as a buyer becomes a

principal Principal may refer to: Title or rank * Principal (academia), the chief executive of a university ** Principal (education), the head of a school * Principal (civil service) or principal officer, the senior management level in the UK Civil Ser ...

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 insuran ...

—one who acts on behalf of a principal party in a deal.

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 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. It involves understanding who they are and what they need. It is an important component of business strategy and a major factor in maintaining com ...

and

market data In finance, market data is price and other related data for a financial instrument reported by a trading venue such as a stock exchange. Market data allows traders and investors to know the latest price and see historical trends for instruments ...

. 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. Some brokers, known as discount brokers, charge smaller

, sometimes in exchange for offering less advice or services than full service brokerage firms. A

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 The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

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 Associati ...

(FINRA), which regulate

stockbroker A stockbroker is an individual or company that buys and sells stocks and other investments for a financial market participant in return for a commission, markup, or fee. In most countries they are regulated as a broker or broker-dealer and ...

s in the United States.

Etymology

The word "broker" derives from

Old French Old French (, , ; ) was the language spoken in most of the northern half of France approximately between the late 8th [2-4; we might wonder whether there's a point at which it's appropriate to talk of the beginnings of French, that is, when it wa ...

''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 * Business broker * Shipping agency * Auto transport broker * Commodity broker * Corredor Público * 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 negoti ...

Intellectual property broker An intellectual property broker mediates between the buyer and seller of intellectual property (IP) and may manage the many steps in the process of creating a deal with regard to the purchase, sale, license, or marketing of intellectual property as ...

Joint venture broker A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access ...

List broker A list broker acts as an agent for those who wish to conduct direct marketing campaigns via direct mail, email, or telemarketing. List brokers provide lists that, minimally, contain a prospect's name and physical address. Consumer Lists may inclu ...

Matchmaking Matchmaking is the process of pairing two or more people together, usually for the purpose of marriage, in which case the intermediary or matchmaker is also known as a marriage broker. Matchmaking may be done as a profession for a fee or it may ...

Meat broker A meat broker is an entity of the meat industry that brokers the buying and selling of meat Meat is animal Tissue (biology), tissue, often muscle, that is eaten as food. Humans have hunted and farmed other animals for meat since prehistory. T ...

Message broker A message broker (also known as an integration broker or interface engine) is an intermediary computer program module that translates a message from the formal messaging protocol of the sender to the formal messaging protocol of the receiver. Mes ...

Mortgage broker A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses. Traditionally, banks and other lending institutions have sold their own products. As markets for mortgages have become more competitive, ...

Pawnbroker A pawnbroker is an individual that offers secured loans to people, with items of personal property used as Collateral (finance), collateral. A pawnbrokering business is called a pawnshop, and while many items can be pawned, pawnshops typic ...

Power broker (term) In political science, a power broker is a person who influences people to vote towards a particular client (i.e. elected official or referendum) in exchange for political and financial benefits. Power brokers can also negotiate deals with other ...

Prime brokerage Prime brokerage is the generic term for a bundled package of services offered by investment banks, wealth management firms, and securities dealers to hedge funds which need the ability to borrow securities and cash in order to be able to inves ...

Real estate broker Real estate agents and real estate brokers are people who represent 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 age ...

Shipbroking Shipbroking is a financial service, which forms part of the global shipping industry. Shipbrokers are specialist intermediaries/negotiators (i.e. brokers) between shipowners and charterers who use ships to transport cargo, or between buyers a ...

Sponsorship broker A sponsorship broker is an individual, or agency, that procures sponsorship funding for properties (defined as an outlet with a captive audience that provides for a positive experience).Event Sponsorship (The Wiley Event Management Series) (Ha ...

Stockbroker A stockbroker is an individual or company that buys and sells stocks and other investments for a financial market participant in return for a commission, markup, or fee. In most countries they are regulated as a broker or broker-dealer and ...

* Office broker *

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

External links

* {{Authority control Financial services occupations

Definition

Etymology

Types of brokers

References

Further reading

External links