stockbroker

noun stock·bro·ker \ -ˌbrō-kər \
Updated on: 10 Nov 2017

Definition of stockbroker

: a broker who executes orders to buy and sell securities and often also acts as a security dealer

stockbrokerage

play \-k(ə-)rij\ noun

stockbroking

play \-ˌbrō-kiŋ\ noun

Recent Examples of stockbroker from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'stockbroker.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of stockbroker

circa 1706


Financial Definition of STOCKBROKER

stockbroker

What It Is

A stockbroker is a person or a company that acts as an intermediary between buyers and sellers of stocks.

How It Works

Stockbrokers 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.

Stockbrokers must have Series 7 and Series 63 licenses; other licenses are often required for specific types of brokers. For example, some stockbrokers 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.

There are many other 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.

Why It Matters

Stockbrokers 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, stockbroker commissions eat into returns, so investors should shop for a stockbroker 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.


STOCKBROKER Defined for English Language Learners

stockbroker

noun

Definition of stockbroker for English Language Learners

  • : someone whose job is to buy and sell shares of stock for other people


STOCKBROKER Defined for Kids

stockbroker

noun stock·bro·ker \ ˈstäk-ˌbrō-kər \

Definition of stockbroker for Students

: a person who handles orders to buy and sell stocks


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