A stock broker or stockbroker is a qualified and regulated professional who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors.

Requirements

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.

Services provided

A transaction on a stock exchange must be made between two members of the exchange  an ordinary person may not walk into the New York Stock Exchange (for example), and ask to trade stock. Such an exchange must be done through a broker.

There are three types of stockbroking service.

• Execution-only, which means that the broker will only carry out the client's instructions to buy or sell.
• Advisory dealing, where the broker advises the client on which shares to buy and sell, but leaves the final decision to the investor.
• Discretionary dealing, where the stockbroker ascertains the client's investment objectives and then makes all dealing decisions on the client's behalf.

In addition to actually trading stocks for their clients, stock brokers may also offer advice to their clients on which stocks, mutual funds, etc. to buy.

History

Philadelphia was the centre of American finance during the first forty years of the new United States. In 1790, the country's first stock exchange was founded there and Chestnut Street was home to the nation's most powerful financial institutions. However, in the 1820s a shift to New York City began and for more than one hundred and fifty years Wall Street has been synonymous with the stock brokerage business. Some sources suggest that historical top-level brokers and a number of other firms rose to prominence over that time, with the top-ranked brokerages in the early 1950s being:Fact: date=August 2007

1. Merrill Lynch
2. Paine Webber & Company
3. Morgan Stanley
4. Goldman Sachs
5. Bear Stearns

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.