The following was written by staff writer, Peter.
The act of stockbroking involves executing buying and selling of the orders for stocks and other securities through the stock market. The orders and the securities can also be sold over the counter for a fee or a commission as the return. The individuals carrying out the act of stock broking are usually connected with the brokerage firms. In most cases, they do the transactions on behalf of retail and even institutional customers. The work of stockbrokers is more or less the same as the work of the broker-dealers and even the brokerage firms.
Before the advancement of the modern technology, the brokers used to be hired to do the work of accessing the stock market. Today the modern technology has made it easy for small investors to trade the stock market at a very lower cost. It has been achieved by the assistance of the various discount brokers in the market. The existence of the discount brokers has made it possible for most of the individuals including the oversea based to afford the stock market investment.
The person carrying out the task of stock broking is entitled the task of managing the investment for a client. They do this in place of the clients. The brokers are given the full opportunity and freedom of controlling every event in the market for the client. They control the prices of the stocks in the market. In the process of controlling the prices, they gain from the prices differences. The stockbroker can be an individual, a company or even large organization.
It is the duty of the stockbroker at CMC markets to acquire the best financial results. This is achieved by buying and selling the shares, the stocks, and other financial products. One can only be able to make enough profits by continuously buying and selling the trade items to get profits. The stockbrokers also do the function of obtaining the best prices for the investors’ shares. They do this irrespective of whether they are buying or selling.
In stock broking business, the brokers do not engage as principals in the transaction, but they only act as agents. The brokers also charge the commission on each sale made. They regularly execute these commission from the transactions made. The commissions usually vary among the brokerage houses. Usually, the brokers show the relevant amount of skills for them to fulfill the customers’ orders. They also work out a lot of care for the commodities of the clients.
In a case of any losses that may occur from any mistake in the transactions, the brokers are normally held responsible. This is because they are normally being given full powers to control all the activities in the market for the investors. The care that is taken by the brokers on the commodities normally depends on the relevant business practices.
In normal circumstances, the brokers are not allowed to do the double actions of acting as dealers and brokers. They are required to keep off from making the secret profits on the transactions. They should also not go to the extent of crossing orders by acting as both brokers and the dealers.
The brokers in the stock broking business always make their fee from the differences that occur between the prices. These are the prices at which they purchase their shares from their accounts and the prices at which they sell them to customers. The spread, which is the difference between the asked price and the bid price, is the compensation for the brokers. This compensation comes after putting the market at best security for trade.
Apart from the primary task of brokers in the business, they also offer limited banking services, broke other securities and provide advisory services to the clients. They offer services like check writing, electronic deposit, and withdrawal, interest bearing among many others. Apart from dealing with stocks, brokers also work on bonds, mutual funds, exchange-traded funds and other services in place of the investor. The brokers also provide the relevant advice to both customers and the investors. The investors need the investment advice from the brokers as per the agreed costs. Every part should honour their part of the agreement.