Who is a Stock Broker?
A Stock Broker, often known as a broker, is a securities market representative. Their key job responsibilities include obtaining and executing buy and sell orders. To invest in stocks and other investment alternatives, market participants or investors rely on their experience and understanding of market dynamics.
Share brokers might operate for themselves or for a brokerage firm.
After registering with a recognized stock exchange, such as the Bombay Stock Exchange, or working for a brokerage firm, a broker is officially recognized. These brokers charge a commission, fee, or mark-up for their services. This fee varies a lot from one broker to the next. Some dealers impose a flat fee, while others take a percentage of the value of the assets sold.
Discount brokers dominate the share market broker sector. Because of their modest fees, this group of brokers has gained significant popularity, making the security market more accessible to the general public. A fundamental distinction between a discount broker and a traditional stockbroker is that the latter is expected to have the extensive market knowledge and to undergo rigorous examination procedures, whereas these requirements are not necessary for a discount broker.
History of stock brokerage
The profession of Stock Broker dates back to the 2nd century BC in Rome. However, as the Roman Empire fell apart, such a profession fell out of favor until the European Renaissance. In a few Italian cities, such as Venice and Genoa, it was a small-scale business with limited and occasional trading of government bonds.
Company stocks, on the other hand, were not formally exchanged until 1602, when the Dutch East India Company issued the first publicly traded equities via the Amsterdam Stock Exchange. The stock broker’s profession expanded thanks to the Dutch Empire’s indoctrination of private property rights law.
The London Stock Exchange was founded around the end of the 17th century, while the New York Stock Exchange was founded nearly a century later, in 1792. In 1875, the Bombay Stock Market became India’s and Asia’s first stock exchange.
Types of Stock Broker
Below is a list of the various sorts of stockbrokers. –
- Traditional or full-time brokers: Customers can choose from a wide range of products and services provided by this type of broker. Securities trading, investment advice, retirement planning, portfolio management, capital gains taxation, and other services are included. Full-time stockbrokers demand a high commission, which may be justified considering the breadth of their services.
As previously said, such brokers must through extensive training and examinations in order to obtain the position, and so possess in-depth knowledge of the stock market. As a result, they are properly trained to bid on your behalf and steer your portfolio to its maximum earning potential while minimizing dangers.
- Discount brokers: The group of brokers is dominated by discount or online stock brokers. They are not only economical, but they also provide convenience to laypeople in terms of time and location. Participants in the market do not need to meet discount brokers in person; instead, they can invest via the internet.
Discount brokers are another option for investors with little disposable income who want to start trading in the stock market. Discount brokers, on the other hand, do not all offer the same level of experience as regular brokers, making them a less profitable alternative for corporations and individuals with large investment portfolios and fees.
The features of the above-mentioned are illustrated in the table below.
|Distinctive points||Traditional Share Broker||Discount Broker|
|Kind of brokerage and range of fees||These brokers charge a commission based on the value of the securities traded. In India, this percentage ranges between 0.25 and 0.75 percent.||Each transaction is usually charged a set price by discount brokers. The cost of online brokerage is between Rs. 10 and Rs. 20.|
|Customer type||Investors that want individualized services, are regular and devoted market participants, and have a substantial volume of investments are ideal candidates.||Is best for people who don’t invest on a regular basis, are new to the market, or can’t afford the exorbitant fees charged by full-time brokers.|
|Services offered||Brokerage services, portfolio management, financial counseling, depository services, Mutual Funds services, and retirement planning are only a few of the company’s main services.||Brokerage, mutual fund services, and passive portfolio management are some of the most fundamental services.|
In addition to stockbrokers, there are two other sorts of stockbrokers who work in the stock market. These are the ones. –
These are self-employed brokers who trade stocks for their personal benefit rather than for the benefit of other investors. They are not allowed to trade in someone else’s name or collect commissions from others because they are not authorized to do so. They provide two stock price quotes, one for buy and one for sell. The profit margin is the difference between these two prices.
This subcategory of stockbrokers is recognized for buying stocks at a lower price on one stock market and then selling them at a higher price on another stock exchange.
How the Advent of the Internet has Impacted Stock Market?
The proliferation of online stock brokers and investing platforms demonstrates the extent to which the internet has influenced the stock market. Previously, only the wealthiest individuals could invest in the stock market by paying exorbitant commissions to full-time brokers.
However, the stock market has percolated to a much more comfortable level as a result of the simplicity with which the stock market and share stockbrokers may be accessed over the internet.
The stock market’s change has increased the volume of transactions dramatically, as well as paved the path for start-ups and small enterprises to generate funds by issuing stock in the market. Stockbrokers are essential in assisting investors in transacting in the stock market on a daily basis.