Broker-Reseller – Definition

Cite this article as:"Broker-Reseller – Definition," in The Business Professor, updated April 7, 2020, last accessed October 21, 2020,



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.

A Little More on What is a Broker-Reseller

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.

Reference for ā€œBroker-Resellerā€ ā€ŗ Investing ā€ŗ Financial Analysis…

Academics research on ā€œBroker-Resellerā€

An evaluation of internet banking and onlineĀ brokerageĀ in Tunisia, Achour, H., & Bensedrine, N. (2005). An evaluation of internet banking and online brokerage in Tunisia. InĀ Proceedings of the 1st International Conference on E-Business and E-learning (EBEL), Amman, JordanĀ (pp. 147-158).

Dutch multinationalĀ tradingĀ companies in the twentieth century, Sluyterman, K. E. (2013). Dutch multinational trading companies in the twentieth century. InĀ The multinational tradersĀ (pp. 100-115). Routledge. The history of the Dutch multinational trading companies in the twentieth century is still a rather unexplored field, as most attention has been focused on the seventeenth-century merchants. It would be interesting to know at the start of this research how many trading companies existed during the twentieth century and how important they were in terms of assets, employees and turnover. When trying to answer these questions, the first problem that arises is one of definition. Which companies are covered by the English term ā€˜trading companiesā€™? Cassonā€™s definition: ā€˜a firm that specialises in market-making intermediation may be defined as a trading firmā€™ is of some help, but covers thousands of firms of very diverse nature and sizes varying from two-man retail traders to multinational companies with large numbers of staff. (Casson, Chapter 2, this volume). We can only start comparing like with like if we narrow down the number of companies to those engaged in roughly similar business activities. In this chapter I want to concentrate on multinational companies in the twentieth century, with the exclusion of those trading in one commodity only. This still leaves a group of fifty to one hundred companies and private firms, judging very roughly from the stock exchange handbooks (Van Ossā€™ Effectenboek 1904-72).

Aspects of the Caribbean Single Market & Economy: How Integrated are RegionalĀ StockĀ Markets. Robinson, C. J. (2006). Aspects of the Caribbean Single Market & Economy: How Integrated are Regional Stock Markets.Ā Available at SSRN 2845463. This study investigates the degree of integration among stock markets in the Caribbean Single Market area by analyzing the pricing of cross listed stocks within the region. The results show that the law of one price is generally violated for cross-listed stocks and there is little integration among the stock markets. It also suggests that there are arbitrage opportunities for investors. This result is in contrast to the experience of other regions of the world that have sought to integrate their stock markets. Empirical studies of European markets generally confirm that the ā€œlaw of one priceā€ holds across markets with regard to multiple listed stocks

Underwriting,Ā Brokerage, and Risk in Municipal Bond Sales. Raineri, L., Robbins, M., Simonsen, B., & Weaver, K. (2012). Underwriting, Brokerage, and Risk in Municipal Bond Sales.Ā Municipal Finance Journal,Ā 33(2). Municipal finance practitioners and scholars have given considerable attention to the evaluation of municipal bond issuance. Much of this work has focused on the cost implications of various choices made by government borrowers when preparing to issue debt. An important component of borrowing costs is the compensation that accrues to firms underwriting the bonds. These firms are presumably compensated for their time and effort in arranging the purchase of bonds from the issuer and then the resale of bonds to customers and for the risk that they are assuming by carrying the bonds on their books until the bonds are resold to customers. The financial value accruing to the underwriting firm as a result of participating in such a sale comes from the underwriterā€™s discount and from the capital gain (or loss) experienced when reselling the bonds to customers. This article seeks to better understand and describe differences in the manner in which firms purchase and resell bonds in order to more precisely classify fi rm behavior. In order to make a distinction between underwriting and brokerage, the authors look at the resale risk that firms actually experience. This article presents several examples of actual transactions and post-sale trading where the risk exposure is substantially different and offers definitions of underwriting versus brokerage that use this distinction.

An Examination of China’s Regulations on InsiderĀ TradingĀ of Unlocked Restricted Stocks. Lian, P., Wang, K., & Zhang, C. (2011).Ā An Examination of Chinaā€™s Regulations on Insider Trading of Unlocked Restricted Stocks. Working paper, Fudan University.

The continuing need forĀ broker-dealer professionalism in IPOs, Fanto, J. (2007). The continuing need for broker-dealer professionalism in IPOs.Ā Entrepreneurial Bus. LJ,Ā 2, 679. In this essay, I contend that the IPO process and its abuses of the late 1990s reveal a fundamental problem in the brokerage industry. The abuses reveal the culmination of a concerted training in business, business schools, and even law schools and, more generally, in society. the acceptance of self-interested profit maximization as the sole goal for business and financial activities. I first review the IPO abuses from the perspective of individual self-interest and the group enhancement of it to show the fundamental motivation of the abuses. I then examine the regulatory responses to these abuses in order to point out their incompleteness. I argue that the reforms were incomplete because they established limited broker-dealer professionalism, focusing only on research analysts, which perversely encouraged those not directly touched to continue to engage in selfinterested conduct. I also contend that this absence of full broker-dealer professionalism can lead to reputational risk that threatens these financial institutions and even the stability of the securities markets. I thus suggest that the professional reform for broker-dealers must be wide-ranging and must reach into the training of future bankers and brokers in the business schools. However, I also offer a practical, stopgap reform suggestion that can help alleviate reputational risk.

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