Executing Broker

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. Discretionary Investment Management

    A form of investment management in which buy and sell decisions ...
Related Articles
  1. Investing Basics

    Picking Your First Broker

  2. Investing

    Fee-Based Brokerage: Will They Work ...

  3. Investing

    Can someone who is not yet of legal ...

  4. Options & Futures

    Brokers and Online Trading

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

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