What Is an Investment Broker?
An investment broker is a person who facilitates buying and selling of a financial instrument. These instruments include stocks, bonds, commodities, futures and options. The broker is the person who actually enters an order into the market. Anyone wishing to become an investment broker must meet specific requirements in order to be certified.
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Tasks
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The investment broker must have a thorough knowledge of the market in which he is trading. He also has to be a good salesman so he can attract and keep clients. Once a client is acquired, the broker executes trades and provides trading advice for the client in exchange for a fee.
Stock Market
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In order to become a stock broker in the United States, the candidate must pass the series 7 examination, also known as the General Securities Representative Exam. The candidate will also have to pass the series 63 exam to become certified at the state level. After passing these exams, the candidate must secure employment with a firm that is recognized by the Financial Regulatory Authority (FINRA).
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Commodities Market
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In order to become a commodities or futures broker, the candidate must pass the series 3 exam. She must also fill out an 8-R form. Once the candidate has completed these two steps, she may submit the information to the National Futures Association (NFA) in order to become a certified broker.
Online Broker
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With the advent of the Internet, online brokerages were established. These services allow individuals to enter trades on their own, but still charge a fee in exchange for placing the orders. It is possible to have a personal broker and an online brokerage account at the same time. While the client has the ability to enter orders, he may still rely on the broker for helpful information on which securities to trade.
Regulation
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As mentioned before, various self-regulatory agencies such as FINRA and the NFA license and regulate brokers. The government also regulates brokers and brokerages through the Securities and Exchange Commission (SEC). If anyone has concerns about the legitimacy of a broker or brokerage, she should contact one of these regulatory bodies.
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