Stockbrocker – Definition

Cite this article as:"Stockbrocker – Definition," in The Business Professor, updated December 9, 2019, last accessed October 20, 2020,


Stockholder Definition

A stockbrocker is an expert who deals in buying and selling stocks and several securities for their clients. They are also known as a broker, investment advisor, registered representative, etc. They are generally linked with a brokerage organization and deal with retail and institutional clients. Though they charge a commission for rendering their services, the extent of the commission depends on the location and the company they are working for. Brokerage organizations and broker-deals are also known as stockbrokers. Generally, the referenced brokerage companies are discount brokers.

Understanding the Role of a Stockbroker

It is important to have adequate access to reputed stock exchanges in order to be a stockbroker. A stockbroker, who is a member of the stock exchange or works for a member company, is eligible to buy and sell shares on these exchanges. Member companies and people working for them receive the license of a broker by FINRA. A person can also deal directly with the issuing firm and buy shares, however, it is easier to hire a stockbroker for the same.

Earlier, only high-net-worth investors enjoyed the privilege of working with stockbrokers and pay them high compensation for their services. But, with the advent of internet and technology, it became easier for discount brokers to offer affordable, quicker and easier ways to buy and sell shares. Ultimately, this reduced the transaction costs associated with the trade and encouraging more investors to make investments in stock markets, even in smaller amounts. This has also enabled them to create more accounts with discount brokers.

Stockbrokers who work for discount broker companies can work as on-call agents and answer customer queries. Also, they can work as branch officers in a specific location. However, there are fewer stockbrokers working for investment institutions or brokerage companies. Such firms usually deal in large transactions or orders including trading huge chunks of stocks or securities, or shares that are not traded in an active manner.

Discount brokers enable everyone, including people living abroad, to make investments in the stock market. The latest introduction of roboadvisors has enabled people to trade stocks through the internet or mobile application with less human interaction and minimum service charges. Since human interaction is not that much, the discount brokers fail to render customized solutions or services to their customers.

Educational requirements

Stockbrokers should have a bacherlor’s degree in business administration or finance in order to serve institutional clients and banks. They should have proficient knowledge of financial rules and regulations, accounting principles, financial forecasting, financial planning, etc to successfully work in this industry. They should also have solid interpersonal skills and be able to sustain good relationships with clients.

Various country licensing requirements

The licensing requirements for stockbrokers vary from one country to another. Say, the U.S. laws require a stockbroker to have at least the FINRA Series 7 and Series 63 or 66, and have sponsorship from a registered investment company. The U.S. floor brokers should be the eligible members of the stock exchange where they are located. While in Canada, stockbrokers should be working for a brokerage company, and have a Canadian Securities Course, Conduct and Practices Handbook, and be enrolled in the Investor Advisor Training Program for 90 days. Prospective stockbrokers willing to work in Hong Kong should work for a certified brokerage company, and take 3 exams with the Hong Kong Securities Institute. But, it would be important to note that passing these exams doesn’t ensure a license as the authority to approve vests in the financial regulatory institution.

In Singapore, one should pass four exams including modules 1a, 5, 6 and 6a that are regulated by the Institute of Banking and Finance. One can apply for the license through the Singapore Exchange and Monetary Authority of Singapore. In the U.K., stockbrokers must have required certifications from the Financial Conduct Authority. The extent of qualifications may vary depending on the particular responsibilities of the broker and his or her employer.

International credentials such as the Certified Financial Planner and Chartered Financial Analyst are gaining popularity as symbols of legitimacy.

References for “Stockbroker › Investing › Stocks › Trading Basics

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