What is a Broker-Reseller?

A broker-reseller is an individual or firm that buys and sells securities on behalf of its clients and for itself. This individual or firm acts as a broker or an agent when buying and selling securities for clients and as the principal or a dealer when making investment decisions for himself. A broker-reseller is sometimes called a broker-dealer, this is a type of broker that acts as an intermediary between brokerages and their clients and also engages in securities deals for himself. Broker-resellers are commonly found at the center of derivatives trading processes or securities trade.

What Does a Broker-Reseller Do?

Typically, broker-resellers receive stock orders from their clients and execute the trades on brokerages. When a broker-reseller is directly buying from and selling for himself, it is acting as the principal or a dealer. Although broker-resellers have a good client base, they lack the needed tool to execute a trade in a timely manner, hence, they route their trades through larger brokerage firms for efficient trade execution. Anyone with a good understanding of securities trade and derivatives processes can act as broker-reseller, even individuals that are yet to be qualified as standard brokers. Unlike broker-resellers, all large brokerages are expected to be members of governing organizations. There are strict rules guiding the operations of major brokerages and specified by the National Association of Securities Dealers and other organizations. It is important that clients or investors carefully select broker-resellers that execute transactions on their behalf in order not to fall victim to fraudulent brokers.