broker

noun bro·ker \ ˈbrō-kər \
Updated on: 3 Dec 2017

Definition of broker

1 : one who acts as an intermediary: such as
a : an agent who arranges marriages
b : an agent who negotiates contracts of purchase and sale (as of real estate, commodities, or securities)
3 : one who sells or distributes something
  • an information broker

broker

verb

Examples of broker in a Sentence

  1. the broker in the hostage situation was a prominent reporter that the gunman felt he could trust

  2. all of the local yacht brokers were at the boat show

Recent Examples of broker from the Web

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.

Origin and Etymology of broker

Middle English, negotiator, from Anglo-French brocour


Financial Definition of BROKER

broker

What It Is

A broker is a person or a company that acts as an intermediary between buyers and sellers. Brokers exist not just in the financial markets, but in the real estate market, the commodities market, the art market -- even the boat market.

How It Works

Brokers are often paid a commission, which is a percentage of the customer's purchase or sale price, though some receive a flat fee per transaction or a mix of the two.

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.

Why It Matters

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.



BROKER Defined for English Language Learners

broker

noun

Definition of broker for English Language Learners

  • : a person who helps other people to reach agreements, to make deals, or to buy and sell property (such as stocks or houses)


BROKER Defined for Kids

broker

noun bro·ker \ ˈbrō-kər \

Definition of broker for Students

: a person who acts as an agent for others in the buying or selling of property

Law Dictionary

broker

noun bro·ker \ ˈbrō-kər \

legal Definition of broker

: an agent who negotiates contracts of sale (as of real estate or securities) or other agreements (as insurance contracts or mortgages) between the parties for a fee or commission — compare dealer, finder
Note: An insurance broker differs from an insurance agent in that a broker is usually considered an agent of the insured, even though he or she may receive a commission from an insurance company. A broker may sell the products of a number of insurers, and an insurer has no liability for a broker's wrongful actions. A securities broker often acts also as a dealer and so is often referred to as a broker-dealer.


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