Executing Broker

AAA

DEFINITION of 'Executing Broker'

The broker or dealer that finalizes and processes an order on behalf of a client. The orders sent to executing brokers are assessed for appropriateness, and if the order is deemed practical, the executing broker will then carry out the order. If the order is rejected, the customer is notified and the stock is not traded.

INVESTOPEDIA EXPLAINS 'Executing Broker'

Once the executing broker has assessed the validity of the order, it is then submitted onto the clearing broker who clears the trade. However, since executing brokers are paid through commission, the possibility exists that this incentive may encourage numerous trades even though they may not be suitable.

RELATED TERMS
  1. Clearing

    The procedure by which an organization acts as an intermediary ...
  2. Clearing House

    An agency or separate corporation of a futures exchange responsible ...
  3. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  4. Broker

    1. An individual or firm that charges a fee or commission for ...
  5. Discount Broker

    A stockbroker who carries out buy and sell orders at a reduced ...
  6. Business Broker

    A professional who specializes in the purchase and sale of companies. ...
Related Articles
  1. Picking Your First Broker
    Investing Basics

    Picking Your First Broker

  2. Fee-Based Brokerage: Will They Work ...
    Investing

    Fee-Based Brokerage: Will They Work ...

  3. Can someone who is not yet of legal ...
    Investing

    Can someone who is not yet of legal ...

  4. Brokers and Online Trading
    Options & Futures

    Brokers and Online Trading

comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
Trading Center