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. Which contra accounts are the best for indicating profitability in a company?

    Learn about the three contra accounts that affect profitability: the contra asset account, the contra liability account and ... Read Answer >>
  2. 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 >>
  3. 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 >>
  4. What is the difference between a broker and a market maker?

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    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 >>
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