Stock brokers
A stock broker is professional who is both qualified and regulated to buy and sell shares and other securities through market Makers in behalf of investors. Shares are sections of companies that a broker can buy and sell. To become a stock broker one must pass exams to gain the qualification, in the USA the exam is called the general securities representative examination or the series 7 exam, in the UK it is called the Securities and Investment Institute, and this is achieved by passing two exams. Once these are passed an individual is a stock broker.
A transaction on a stock exchange has to be made between two members of the exchange which must be done through a broker. The main types of stock broking Service are execution only which means a broker will on buy or sell as per the client’s wishes, the next is advisory dealing which is where the broker will advise the client which shares to buy, but it’s the client decision as to what the final decision. The final type is discretionary dealing which is where the broker makes all the dealing decisions on the client’s behalf.
In 1790, the first stock exchange was founded in Philadelphia, USA, where it remained until 1820’s when it moved to Wall Street, New York where it remains and is synonymous with the stock market. Sometimes stock brokers will trade on their own behalf (as a principal) using their knowledge to buy and sell on the stock market, these stock brokers refer to themselves as dealers, stock traders, or traders. When a stock broker works for a business or individual as an agent they charge a flat fee, and commission for undertaking the trade. But when working as a principal with a client the broker will charge a mark-up or mark-down on the current market. It is the same in the UK, except that when the broker works as a principal the broker informs the client and does not charge commission...
What to look for when selecting your stock broker
Stock Broker Dealing Costs: This is the actual cost of placing an individual buy or sell order on the Stock Market. One most purchases or sales on the Stock Market you can expect to pay stamp duty. When selecting a Stock Broker always check that cheap dealing offers don’t have high admin charges.
Stock Broker Admin charges: Stock brokers normally charge either per transaction, per calendar month, or quarterly. When looking at selecting your Stock Brokers please think of the number of deals likely per year and then think of the admin cost. If you are buying regularly then maybe paying per month is the better option, however if you wish to buy stocks and shares every now and again then per transaction could work better for you!
Stock Broker Transfer costs: Check costs to transfer in and out shares, share certificates and other charges must also be considered when evaluating the cost of your Stock Broker.
Online or telephone dealing with your Stock Broker: Most brokers now offer some form of online dealing with telephone as optional back-up!
Stock Broker Support: Always think about how much info can the broker offer you? Will your Stock Broker offer advice and recommendations or is his service completely without Stock Broker support? Some will offer Real-time stock and share prices, trades information, share news, stock reviews etc direct from the trading floor!!
How to become a stock broker?
At mjward.co.uk we have been looking at how to become a stockbroker, there are no set qualifications for becoming a stockbroker, although most employers will expect you to have a degree (normally class 2:1 or above). Your degree could be in any subject, but business, finance or accountancy will give you an advantage. If your degree is not business-related, you must be able to show you understand how financial markets work. It may be helpful if you find a work experience placement in an investment bank or similar company.
Why not become a trainee stockbroker after gaining experience as an investments administrator. The bottom line is that a stockbroker must be registered as an ‘authorised person’ with the Financial Services Authority (FSA). To become registered, to do this you must pass appropriate exams approved by the FSA. Experienced financial advisers can also give investment advice and manage clients' portfolios if they have had relevant training, such as the Diploma in Financial Planning. Find out more:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Tel: 020 7066 1000
http://www.fsa.gov.uk
The Financial Services Authority (FSA) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. We are a company limited by guarantee and financed by the financial services industry. The Treasury appoints the FSA Board, which currently consists of a Chairman, a Chief Executive Officer, three Managing Directors, and 9 non-executive directors (including a lead non-executive member, the Deputy Chairman). This Board sets our overall policy, but day-to-day decisions and management of the staff are the responsibility of the Executive.
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