Definition of broker
- an information broker
the broker in the hostage situation was a prominent reporter that the gunman felt he could trust
all of the local yacht brokers were at the boat show
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'broker.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use: 14th centurySee Words from the same year
There are many types of brokers in the financial world. For example, a commodities broker specializes in trading commodities, a floor broker handles orders on the floor of a stock or commodities exchange and a full-service broker offers brokerage services and sells other financial products such as insurance, tax planning or research conducted by other members of the brokerage firm. A discount broker essentially executes trades on behalf of customers and does little else. Brokers are not the same as research analysts, who analyze and make recommendations about certain stocks.
In the financial world, brokers must have Series 7 and Series 63 licenses; other licenses are often required for specific types of brokers. For example, some brokers must also obtain a Series 3 license if they want to trade certain financial products such as futures and commodities. To obtain a Series 7 license, the applicant must pass the Series 7 exam (also called the Qualification Examination for General Securities Representative), which primarily covers the seven critical functions performed by registered representatives: seek business for the broker/dealer, evaluate customer needs and objectives, advise clients, manage customer accounts and account records, explain the securities markets and the factors that affect them, execute orders for clients and monitor client portfolios. The National Association of Securities Dealers administers the test.
Brokers are some of the most important people in any market because they bring buyers and sellers together and thus create liquidity and efficiency in the market.
However, investors should remember that broker commissions eat into returns, so investors should shop for a broker that provides an appropriate level of service. For instance, the extra cost of a full-service broker may be worth it for people who don't have the knowledge or inclination to stay on top of complicated investing or financial planning. Likewise, new investors or those with complex portfolios might find more comfort in full-service brokers. Investors who hold their investments for a long time are usually less bothered by higher trading commissions because they don't trade that often.
: a person who helps other people to reach agreements, to make deals, or to buy and sell property (such as stocks or houses)
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