What is Stock Broker with Examples, Types, Roles and Differences

Stock Broker-What is Stock Broker-Examples of Stock Broker Example-Role of a Stock Broker-Types of Stock Broker-Difference Between Discount and Full Service Broker

On the financial market, stockbrokers buy and sell shares. Their primary role is to monitor buy and sell orders. Investors rely on their market knowledge and expertise when purchasing stocks or making other investments. Brokers might operate for themselves or for a company. Let us understand what is stock broker with examples along with difference between a discount and full-service broker and types of stock brokers.

To become a broker, join the Bombay Stock Exchange or a brokerage firm. Brokers make money by charging commissions, fees, or markups. Brokerage fees vary greatly. Some dealers impose a flat fee, while others take a percentage of the exchange value. To gain a better understanding of the issues involved in money market topic, read this thought-provoking article.

What is Stock Broker?

Stockbrokers assist investors in the purchase and sale of equities. Moreover, brokers are employed by SEC-regulated brokerages (SEC). Stockbrokers who work on commission earn a percentage of the trade’s value.

You can refer to different types of brokerage which will assist you to understand the concept in much better way for your research purpose.

Understanding Stock Broker

Stock brokers provide comprehensive services at reasonable prices. The first group does not just sell stocks. Bonds, annuities, and insurance are all available. Morgan Stanley and Merrill Lynch both offer full-service brokerage services. Discount brokers provide less services but make more trades. Charles Schwab and Fidelity are two discount brokerage firms.

In addition, regulation and licence for this industry is manage by FINRA. A FINRA-licensed broker is refer to as a “registered representative.”

Stockbrokers must pass the Series 7 exam to get register. Therefore, this test is organize by FINRA. Except for commodities, futures, life insurance, and real estate, Series 7 allows them to sell anything. They offer stocks, bonds, options, and other assets for sale. After completing the exam, individuals must work for a registered broker-dealer, also known as a wirehouse.

Many states need stockbrokers to pass the Uniform Securities Agent Examination in order to obtain a Series 63 licence. State securities laws, regulations, ethics, and fiduciary responsibilities are all put to the test. Stockbrokers seek more licences so that they can provide more services to their clients.

Stock Broker Examples

Full-service and cheap brokers work for themselves. The best full-service brokers work on commission and receive up to 40% of consumer fees; 60% goes to the business.

Brokers with less experience earn between 35 and 25 percent. The amount of attention a stock broker pays a client is determine by the balance of their brokerage account.

Full-service brokers concentrate on high-end accounts. Discount brokerages allow clients to make the majority of investing decisions and only execute transactions that they request.

Role of a Stock Broker

Go to the NYSE or NASDAQ to buy or sell equities. To trade on these exchanges, you must be a member. Instead, FINRA has authorised many member companies and their employees to act as brokers or broker-dealers (FINRA).

Individual investors can purchase stock directly from the corporation, however it is more convenient to employ a stockbroker.

Until recently, most people couldn’t afford stocks. Only wealthy or large investors, such as pension fund managers, benefited. They had to pay hundreds of dollars for trade execution through full-service brokers.

Therefore, the Internet and other technological advancements have allowed discount brokers to provide low-cost, rapid, and automated online services. Microinvestors can acquire small amounts of stock through Robinhood and SoFi. Most market accounts are now held and managed by bargain brokers.

Types of Stock Broker

A stockbroker executes market orders on behalf of his or her clients. Brokers are also refer to as RRs (registered representatives) or investment advisors. The following are some types of stock broker you should be aware of it:

Brokers who Work Full-time

This broker provides a variety of products and services. Stock trading, financial advice, retirement planning, portfolio management, and capital gains taxation are examples of these services. Full-time stockbrokers may earn a big commission when you consider everything they perform.

These brokers must go through extensive training and testing to earn their positions, so they are well-versed in the stock market. As a result, they may place bids on your behalf, manage your portfolio, and reduce risks.


This stockbroker purchases inexpensive stocks on one exchange and sells them for a higher price on another. Arbitrage is the practise of buying and selling the same item on separate marketplaces in order to profit from price differences.

Discount Brokers

The sector is dominate by discount or online stock brokers. They’re inexpensive and useful for tracking time and position. Online investors do not need to meet with low-cost brokers.

Customers with limited funds can invest with discount brokers. Because not all bargain brokers are as skilled as conventional brokers, they are a less profitable option for businesses and individuals with large sums of money to invest.

Brokers work for discount brokerages. They could be “voice brokers” (on the phone) or branch officials. They might speak with premium online broker clients.


These brokers buy and sell stocks for their own benefit, not for the benefit of investors. They are also not permit to trade in the names of others or take commissions. Stock prices are set twice. The buy and sell prices are both written down. So, this represents their profit margin.

Educational Requirements for Stockbrokers

A bachelor’s degree in finance or business administration is typically require for stockbrokers. Financial rules and regulations, accounting methods, economic and monetary principles, financial planning, and financial forecasting are all required for this profession.

Global certificates are desired because they reflect credibility and financial ability. CFP and CFA are both certifications (CFA).

Difference Between a Discount and Full-Service Broker?

A low-cost broker who buys and sells for clients. Full-service brokers provide research, advice, portfolio management, and other services. Because Internet brokerages have reduced commissions to zero, bargain brokers now provide research and other services.


Because of the internet, there are numerous online stock brokers and investment platforms. In the past, only the wealthy could afford to pay the high charges charged by full-time brokers. Moreover, online stock exchanges and stockbrokers have made it easier to access the stock market. Now you understand what is stock broker with examples, education requirement, roles and types of stock brokers.

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