A broker is a person or firm who arranges transactions between a

buyer Procurement is the method of discovering 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. When a government agency buys goods or serv ...

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. The seller, or the provider of the Goods and services, goods or services, c ...

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.

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. Mark ...

and

market data ''For market data as used in marketing, see marketing information system'' 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 an ...

. 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 commission, 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 d ...

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 U.S. 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. The primary purpose of the SEC is to enforce the law against market ...

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 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 stocks an ...

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 intelligib ...

''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 Car brokers specialise in helping car buyers source and buy cars. They typically offer services such as finding a particular used car model to fit a budget, getting the lowest price on a new car, or negotiating with a used car seller on behalf of ...

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 d ...

Business broker Business brokers, also called business transfer agents, or intermediaries, assist buyers and sellers of privately held businesses in the buying and selling process. They typically estimate the value of the business; advertise it for sale with o ...

Shipping agency A shipping agency or shipping agent is the designated person or agency held responsible for handling shipments and cargo, and the general interests of its customers, at ports and harbors worldwide, on behalf of ship owners, managers, and charte ...

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 vehicles ...

Commodity broker A commodity broker is a firm or an individual who executes orders to buy or sell commodity contracts on behalf of the clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contra ...

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 28, ...

Customs broker Custom brokers or Customs House Brokerages are working positions that may be employed by or affiliated with freight forwarders, independent businesses, or shipping lines, importers, exporters, trade authorities, and customs brokerage firms. North ...

Freight broker A freight broker is an intermediary between a shipper and a freight service provider. Freight brokers can specialize in certain types of freight, such as equipment hauling on lowboys, oversize, bulk tanker, auto, or other types of freight transp ...

Information broker A data broker is an individual or company that specializes in collecting personal data (such as income, ethnicity, political beliefs, or geolocation data) or data about companies, mostly from public records but sometimes sourced privately, and ...

(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 acces ...

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 includ ...

Matchmaking Matchmaking is the process of matching two or more people together, usually for the purpose of marriage, in which case the matchmaker is also known as a marriage broker. The word is also used in the context of sporting events such as boxing, in ...

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. Mess ...

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 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'' or ...

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 p ...

Prime brokerage Prime brokerage is the generic name 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 invest ...

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 agen ...

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 and ...

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) (Har ...

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 stocks an ...

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

External links

* {{Authority control Financial services occupations

Definition

Etymology

Types of brokers

References

Further reading

External links