A broker is an intermediary between a seller and a buyer in the securities market. This profession is very much in demand and prestigious, because a broker is not only a smart exchange player, but also a first-class financier. All his activities are aimed at performing various transactions with securities.
The nature of brokerage
Private traders are prohibited from directly performing transactions with securities, so they are forced to turn to the services of brokers. This is their main role. A broker can be either a legal entity or an individual who must be accredited by federal authorities.
Brokerage is the process of making civil transactions with securities not only on behalf of, but also at the expense of the client. The brokerage transaction is based on compensated bilateral agreements.
Clients' money transferred to the broker, for example, for investing in securities, is kept in a separate bank account. This account is opened by a broker in credit institutions. The same applies to funds that are received as a result of brokerage transactions. The broker is, in principle, obliged to monitor the money of each client, as well as provide reports for any change in finances due to transactions and operations on client accounts.
Brokers are members of stock exchanges, so it is their job to find counter-agents for client investors. Brokers must also complete all the necessary procedures for the registration and registration of the transaction, for the legal and financial protection of clients.
Brokerage conditions
The broker is a professional participant in the securities market, and any of his activities must be licensed. In accordance with the requirements of the Federal Service for Financial Markets, the activities of a broker must be confirmed by the necessary licenses, which allow to carry out brokerage operations in securities transactions with funds of legal entities and individuals (these are two different licenses), as well as permission to conduct brokerage operations with state, municipal and other entities. In any case, the broker must work on the basis of a brokerage service agreement drawn up in advance with the client.
How to become a client of a broker
If a potential investor has a desire to buy or sell securities, it is necessary to submit an application to the broker. This document is a set of terms of the transaction. In the application, the client leaves his details, indicates the type and amount of securities to be bought or sold, indicates the price of the transaction and the timing of its execution.
After the application has been reviewed by the broker, a special order form is drawn up. It is created by a broker, and this document specifies the name of the asset, the number of securities to be bought or sold, information about the exchange where the asset will be quoted, the type of transaction, the name of the client and his account number, as well as the period of the order.