Stock Broker

A stock broker or stockbroker is a regulated professional who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors.In order to become a stockbroker in the United States, a candidate must pass the General Securities Representative Examination (also known as the "Series 7 exam").

In the UK, brokers are required to pass the SII (Securities and Investment Institute link title) Certificate in Securities, this qualification is achieved by passing two exams: Either Unit 1: FSA Financial regulations or Unit 6 Principles of Financial Regulation for MiFID compliant retail trading, and either Unit 2: Securities, Unit 3: Derivatives or Unit 4: for both Securities and Derivatives. Passing Unit 1 or Unit 6 identifies individuals as having attained FSA Approved Person Status.

Roles similar to that of a stockbroker include investment advisor, and financial advisor. A stockbroker may or may not be also an investment advisor, and vice versa.The Certified Financial Planner designation initially offered by the American College in Pennsylvania is considered by many to be the next educational step a stockbroker can take in order to be considered a legitimate and ethical financial consultant. Though not strictly true, it is still vital to assert the authority taken.

Stockbrokers also sometimes or exclusively trade on their own behalf, as a principal, speculating that a share or other financial instrument will increase or decline in price. In such cases the term broker makes little sense and the individuals or firms trading in principal capacity sometimes call themselves dealers, stock traders or simply traders. A stock broker is just the main part of being a City Trader. Other types of City Trading include working in the Foreign Exchange.

Since the 1980s stockbroking firms have also been allowed to be market makers as long as the appropriate Chinese walls are put in place.With the advent of automated stockbroking systems on the Internet the client often has no personal contact with his/her stockbroking firm. The stockbroker's system performs all the stockbroking functions: it obtains the best price from the market, executes and settles the trade.

Today, most of the once well-known corporate brand names including mid-sized firms such as Smith Barney have been swallowed up by global financial conglomerates. Only a few firms remain independent, such as Edward Jones Investments, Stifel Nicolaus, Oppenheimer & Co, JP Turner & Company and Raymond James. Discount brokers (such as E*TRADE, Scottrade, TD Ameritrade, and Charles Schwab) have taken a large share of the business by offering highly discounted commissions. Discount brokers may offer limited advisory services, but their primary focus tends to be servicing self directed retail accounts.