Contra Broker

DEFINITION of 'Contra Broker'

A term used to describe the broker participating on the opposite side of a transaction. Contra brokers will take the opposing side of a buy or sell order from the initiating broker, who is submitting said order, on their client's behalf. Contra brokers add efficiency and liquidity to the marketplace by aiding in the filling of orders by other market participants.

BREAKING DOWN 'Contra Broker'

Typically, a contra broker will be acting on behalf of their own client when filling a given trade. Although contra brokers add liquidity to the market, they should not be viewed as market makers, as they do not guarantee that orders will be filled. They are simply the opposing party to a given broker order.

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RELATED FAQS
  1. Why is the use of contra accounts so important for maintaining ledgers?

    Examine the role of contra accounts in financial accounting, including several examples of different contra accounts found ... Read Answer >>
  2. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
  3. How does an insurance broker make money?

    Discover how an insurance broker makes money. Insurance brokers are important in helping people find the right insurance ... Read Answer >>
  4. As a shareholder, why is the treasury stock contra account activity important?

    Learn what treasury stock is used to measure. Understand why a shareholder should be interested in a company's treasury stock ... Read Answer >>
  5. There are so many stockbrokers out there. How do I go about choosing the best one ...

    If you decide that you have the knowledge and experience to take on stock investing, or if you feel you would like to give ... Read Answer >>
  6. My broker just sold securities out of my account without my permission. Is this legal?

    Your broker's actions are not legal unless he or she sold the securities under certain conditions. Let's look at the two ... Read Answer >>
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