Agency Broker

DEFINITION of 'Agency Broker'

A broker that acts as an agent to its clients. When acting as the agent, the agency broker must look after its clients' best interests, which involves attempting to fill client orders at the lowest price and in the fastest way possible. Common clients of an agency broker include large institutional funds that place large block orders.

BREAKING DOWN 'Agency Broker'

An agency broker is a broker that acts as a middle man to the stock exchange, and places trades on behalf of clients. This is in direct contrast to broker-dealers, who purchase orders from clients and then sell these blocks into the market. Special care must be taken when using any broker, as there may be hidden fees associated with placing trades.

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RELATED FAQS
  1. Does agency theory apply to brokers and clients?

    Learn how the existence of incentives that encourage moral hazard impacts broker-client relationships. Understand how agency ... Read Answer >>
  2. Does a broker always have to buy a stock if I want to sell it?

    There are certain times when a broker must purchase the stock that you are selling. For example, if the broker is a market ... Read Answer >>
  3. Why do brokers ask for personal information before they make any trades?

    According to the Securities and Exchange Commission (SEC), there are three main reasons why a broker will ask for personal ... Read Answer >>
  4. I'm new to this. Can I sell or buy stock by myself?

    In order to buy stocks, you need the assistance of a stock broker since you cannot just phone up a company and ask to buy ... Read Answer >>
  5. Do I always need to use a stock broker?

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