A stockbroker is a regulated

broker 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 confu ...

, broker-dealer, or

registered investment adviser A registered investment adviser (RIA) is a firm that is an investment adviser in the United States, registered as such with the Securities and Exchange Commission (SEC) or a state's securities agency. The numerous references to RIAs within the Inve ...

(in the United States) who may provide

financial advisory Corporate services or business services are activities which combine or consolidate certain enterprise-wide needed support services, provided based on specialized knowledge, best practices, and technology to serve internal (and sometimes external) ...

and investment management services and execute transactions such as the purchase or sale of stocks and other investments to

financial market participants There are two basic financial market participant distinctions, investor vs. speculator and institutional vs. retail. Action in financial markets by central banks is usually regarded as intervention rather than participation. Supply side vs. ...

in return for a commission, markup, or

fee A fee is the price one pays as remuneration for rights or services. Fees usually allow for overhead, wages, costs, and markup. Traditionally, professionals in the United Kingdom (and previously the Republic of Ireland) receive a fee in cont ...

, which could be based on a flat rate, percentage of assets, or hourly rate. The term also refers to financial companies, offering such services. Examples of professional designations held by individuals in this field, which affects the types of investments they are permitted to sell and the services they provide include chartered financial consultants,

certified financial planner The Certified Financial Planner (CFP) designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards (CFP Board) in the United States, and by 25 other organizations affiliate ...

s or

chartered financial analyst The Chartered Financial Analyst (CFA) program is a postgraduate professional certification offered internationally by the American-based CFA Institute (formerly the Association for Investment Management and Research, or AIMR) to investment and fina ...

s (in the United States and UK), chartered strategic wealth professionals (in Canada), chartered financial planners (in the UK). 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 ...

provides an online tool designed to help understand professional designations in the United States.

Terms

The other names or titles include share holder registered representative (in the United States and Canada), trading representative (in Singapore), or more broadly, an investment broker, investment adviser, financial adviser, wealth manager, and investment professional.

History of stock broking

The first recorded buying and selling of shares occurred in

Rome , established_title = Founded , established_date = 753 BC , founder = King Romulus (legendary) , image_map = Map of comune of Rome (metropolitan city of Capital Rome, region Lazio, Italy).svg , map_caption ...

in the 2nd century BC. After the

fall of the Western Roman Empire The fall of the Western Roman Empire (also called the fall of the Roman Empire or the fall of Rome) was the loss of central political control in the Western Roman Empire, a process in which the Empire failed to enforce its rule, and its vas ...

, stockbroking did not become a profession until after the

Renaissance The Renaissance ( , ) , from , with the same meanings. is a period in European history The history of Europe is traditionally divided into four time periods: prehistoric Europe (prior to about 800 BC), classical antiquity (800 BC to AD ...

, when government

bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemica ...

s were traded in Italian city-states such as

Genoa Genoa ( ; it, Genova ; lij, Zêna ). is the capital of the Italian region of Liguria and the sixth-largest city in Italy. In 2015, 594,733 people lived within the city's administrative limits. As of the 2011 Italian census, the Province of ...

and

Venice Venice ( ; it, Venezia ; vec, Venesia or ) is a city in northeastern Italy and the capital of the Veneto region. It is built on a group of 118 small islands that are separated by canals and linked by over 400 bridges. The isla ...

. In 1602, the Amsterdam Stock Exchange (now Euronext Amsterdam) became the first official stock market with trading in shares of the

Dutch East India Company The United East India Company ( nl, Verenigde Oostindische Compagnie, the VOC) was a chartered company established on the 20th March 1602 by the States General of the Netherlands amalgamating existing companies into the first joint-stock ...

, the first company to issue stock. In 1698, the

London Stock Exchange London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St P ...

, opened at the

Jonathan's Coffee-House Jonathan's Coffee House was a significant meeting place in London in the 17th and 18th centuries, famous as the original site of the London Stock Exchange. The coffee house was opened around 1680 by Jonathan Miles in Change (or Exchange) Al ...

. On May 17, 1792, the

New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed ...

opened under a

platanus occidentalis ''Platanus occidentalis'', also known as American sycamore, American planetree, western plane, occidental plane, buttonwood, and water beech, is a species of ''Platanus'' native to the eastern and central United States, the mountains of northeas ...

(buttonwood tree) in

New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...

, as 24 stockbrokers signed the Buttonwood Agreement, agreeing to trade five securities under that buttonwood tree.

Licensing and training requirements

Australia

Up until January 1, 2019, investment professionals that offer financial advice in Australia had to pass training pursuant to

RG146 Regulatory Guide 146 (RG 146) on Training of financial product advisers, formerly known as policy statement 146 (PS 146) is an Australian financial regulation issued by the Australian Securities and Investments Commission (ASIC) related to the ...

. They must hold an Australian Financial Services Licence that is overseen by the Australian Securities and Investments Commission. They are subject to

fiduciary A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for examp ...

obligations. As of 2019, Australia's biggest online stockbroker was

Commonwealth Securities CommSec is Australia's largest online brokerage firm, stockbroking firm. It is a subsidiary of the Commonwealth Bank. Though its Internet trading platform constitutes the vast majority of its business, it also offers a telephone based brokerage ...

, other large brokers were ANZ Share Investing, nabtrade and Westpac Online Investing.

Canada

Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...

, to be licensed as a "registered representative" or an "investment advisor" and thus be qualified to offer investment advice and trade all instruments with the exception of derivatives, an individual employed by an investment firm must have completed the

Canadian Securities Course The Canadian Securities Institute (CSI; formerly, CSI Global Education) is a Canadian organization that offers licensing courses, advanced certifications, continuing education and custom training for financial services professionals in Canada an ...

, the Conduct & Practices Handbook, and the 90-day Investment Advisor Training Program. Within 30 months of obtaining designation as a "registered representative", the registrant is further required to meet the post-licensing proficiency requirement to complete the Wealth Management Essentials course. A registered representative is also required to complete 30 hours of professional development (product knowledge) and 12 hours of compliance training every three year continuing education cycle as set out by the Investment Industry Regulatory Organization of Canada. To trade options and/or futures, a registered representative must pass the Derivatives Fundamentals Course in addition to the Options Licensing Course and/or the Futures Licensing Course, or alternatively, the Derivatives Fundamentals Options Licensing Course for options.

Hong Kong

Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China (abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delta i ...

, to become a representative one has to work for a licensed firm and pass 3 exams to prove competency. Passing a fourth exam results in obtaining a "specialist" license. All tests can be taken with the Hong Kong Securities Institute. After passing all tests, approval must be received by the Securities and Futures Commission.

India

Share brokers in

India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...

are governed by the

Securities and Exchange Board of India Act, 1992 The Securities and Exchange Board of India Act, 1992 is an act that was enacted for regulation and development of securities market in India. It was amended in the years 1995, 1999, and 2002 to meet the requirements of changing needs of the s ...

and brokers must register with the Securities and Exchange Board of India. The

National Stock Exchange of India National Stock Exchange of India Limited (NSE) is the leading stock exchange under the ownership of various group of domestic and global financial institutions, public and privately owned entities and individuals. It is located in Mumbai, M ...

and the

Bombay Stock Exchange BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange. It is located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand Roychand, a Jain businessman, it is the oldest stock exchange i ...

via brokers, provide an ecosystem to investors to trade in capital markets through various channels- broker offices, investment advisor or screen-based electronic trading system. An individual employed by an investment firm must complete the National Institute of Securities Markets (NISM) exam and apply to SEBI for registration as an Investment Advisor. Stock market advisory and research services are highly regulated in India. Only SEBI registered stock advisory and investment research analysts are allowed to do so. The complete details of these authorized persons are available on website of SEBI for protection of investors.

Ireland

The recognized benchmark designation for investment professionals in

Ireland Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...

is the QFA ("qualified financial adviser") designation, which is awarded to those who pass the Professional Diploma in Financial Advice and agree to comply with the ongoing "continuous professional development" (CPD) requirements. The qualification, and attaching CPD program, meets the "minimum competency requirements" specified by the Financial Regulator, for advising on and selling five categories of retail financial products: * Stock shares, bonds, and other investment instruments * Savings, investments, and pensions * Mortgage loans * Consumer credit * Life insurance As of 2019,

Davy Davy may refer to: * Davy (given name) * Davy (surname) * Davy lamp, a type of safety lamp with its flame encased inside a mesh screen * Davy, West Virginia, United States, a town * Davy Sound, Greenland * Davy (crater), a crater on the moon ...

and Goodbody were Irish largest stockbrokers.

New Zealand

New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...

, the

New Zealand Qualifications Authority The New Zealand Qualifications Authority (NZQA; mi, Mana Tohu Mātauranga o Aotearoa) is the New Zealand government Crown entity tasked with administering educational assessment and qualifications. It was established by the Education Act 1989 ...

oversees qualifications. The New Zealand Certificate in Financial Services (Level 5) is the minimum level of qualification necessary to offer investment advice.

Singapore

Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, bor ...

, becoming a trading representative requires passing 4 exams, modules 1A, 5, 6 and 6A, from the Institute of Banking and Finance and applying for the license through MAS and SGX.

South Africa

The Johannesburg Securities Exchange rules require that member firms must be under the control of a "qualified stockbroker", who is also an

executive director Executive director is commonly the title of the chief executive officer of a non-profit organization, government agency or international organization. The title is widely used in North American and European not-for-profit organizations, though ...

of the firm; and branches, likewise managed. The South African Institute of Stockbrokers (SAIS) offers the six exams required to become such, a Certified Stockbroker, or CSb(SA), following 3 years' work experience, and with other educational requirements met. See also re. "Regulated Positions" and "Registered Persons" at The

South African Institute of Financial Markets The following is a list of securities examinations and the organizations that offer them. Africa *The Securities Industry Training Institute East Africa (SITI) was conceptualized in 2008 to standardize and administer market education for the Ea ...

. (SAIS also offers the Financial Markets Practitioner vocational certification.)

South Korea

South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korean Peninsula and sharing a land border with North Korea. Its western border is formed by the Yellow Sea, while its eas ...

, the

Korea Financial Investment Association The Korea Financial Investment Association (KOFIA, Hangeul: 금융투자협회) is a non-profit, self-regulatory organization (SRO) in South Korea, founded under the Financial Investment Services and Capital Markets Act. It was established on Febr ...

oversees the licensing of investment professionals.

United Kingdom

Stockbroking is a regulated profession in the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...

and brokers must achieve a recognised qualification from the Appropriate Qualifications list of the Financial Conduct Authority (FCA). The Chartered Institute for Securities & Investment (CISI), established in 1992, is the largest UK professional body for investment professionals. It evolved from the London Stock Exchange, has around 45,000 members in over 100 countries and delivers more than 40,000 exams each year. CFA UK also offers qualifications. It represents the interests of around 12,000 investment professionals and is part of the worldwide network of members of the

CFA Institute The CFA Institute is a global, not-for-profit professional organization that provides investment professionals with finance education. The institute aims to promote standards in ethics, education, and professional excellence in the global investme ...

. Qualifications include: th
CISI Level 4 Diploma in Investment Advice
and th
CISI Level 7 Diploma in Wealth Management

United States

The

, a

self-regulatory organization A self-regulatory organization (SRO) is an organization that exercises some degree of regulatory authority over an industry or profession. The regulatory authority could exist in place of government regulation, or applied in addition to governmen ...

, regulates investment professionals in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...

. Exams that individuals may take for accreditation include the

Series 7 exam In the United States, the Series 7 exam, also known as the General Securities Representative Exam (GSRE), is a test for entry-level registered representatives, to buy or sell security products such as corporate securities, municipal securities, ...

, the

Uniform Securities Agent State Law Exam The Uniform Securities Agent State Law Examination, commonly referred to as the Series 63, is developed by North American Securities Administrators Association (NASAA) and is administered by the Financial Industry Regulatory Authority (FINRA). Th ...

(Series 63), the Uniform Combined State Law Exam (Series 66), and the

Uniform Investment Adviser Law Exam Uniform Investment Adviser Law Examination, also called the Series 65 exam, is a test taken by individuals in the United States who seek to become licensed investment adviser representatives. The exam covers topics necessary to provide investment a ...

(Series 65). Individuals holding some of those licenses, such as the

Series 6 exam In the United States, the investment company products/variable life contracts representative exam, is commonly referred to as the Series 6 exam. Individuals passing this multiple choice exam are licensed to sell a limited set of securities product ...

, cannot be called stockbrokers since they are prohibited from selling stocks. Selling variable products, such as a

variable annuity A life annuity is an annuity, or series of payments at fixed intervals, paid while the purchaser (or annuitant) is alive. The majority of life annuities are insurance products sold or issued by life insurance companies however substantial case l ...

contract or

variable universal life insurance Variable universal life insurance (often shortened to VUL) is a type of life insurance that builds a cash value. In a VUL, the cash value can be invested in a wide variety of separate accounts, similar to mutual funds, and the choice of which of ...

policy, typically requires the broker to also have one or another state insurance department licenses. Individuals and firms are regulated by 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 laws related to the

Investment Advisers Act of 1940 The Investment Advisers Act of 1940, codified at through , is a United States federal law that was created to monitor and regulate the activities of investment advisers (also spelled "advisors") as defined by the law. It is the primary source of r ...

, including laws related to

References

{{Authority control Financial services occupations