A professional individual or firm who arranges transactions between a buyer and a seller for a commission is known as a broker. These individuals or firms acts as intermediaries between the buyer and seller.
The commission earned by a broker upon successful execution of a deal is a percentage of the price paid by their client for the desired security. Some brokers, however, choose to agree a flat fee per deal or may decide to mix the previously mentioned commission options.
- Commodities brokers specialize in trading commodities
- Floor brokers are specialists in handling orders on the floor of a stock exchange, for example
- Full-service brokers offer brokerage services and engage in the selling of insurance, tax planning or research conducted by other members of their firm
- Discount brokers perform a limited function when compared to the above mentioned brokers in that their sole function is to execute trades on behalf of clients
Brokers are some of the most important people in any market because they bring buyers and sellers together and create liquidity and efficiency in the market.