Floor Broker (FB)

AAA

DEFINITION of 'Floor Broker (FB)'

An independent member of an exchange who is authorized to execute trades on the exchange floor on behalf of clients. A floor broker is a middleman who acts as an agent for clients, indirectly giving them the best access possible to the exchange floor. A floor broker’s clients typically include institutions and wealthy people such as financial-service firms, pension funds, mutual funds, high net worth individuals and traders. A floor broker’s primary responsibility is “best execution” of client orders, and to achieve this objective, he or she must continuously assess myriad factors including market information, market conditions, prices and orders.

Also known as “pit broker.”

INVESTOPEDIA EXPLAINS 'Floor Broker (FB)'

Once a floor broker receives a buy or sell order for a specific stock, he or she will attempt to get the most competitive market rate for the client. The floor broker does this by proceeding to the trading post on the exchange floor, where the specialist for the stock is located, and bids against other brokers and traders to get the best price for the stock purchase or sale. Upon completing the transaction, the floor broker notifies the client through the client’s registered representative.

A floor broker is different from a floor trader, who trades as principal for his or her own account, whereas the floor broker acts as an agent for clients. A floor broker also differs from a commission broker in that the latter is an employee of a member firm, while the floor broker is an independent member of the exchange.

RELATED TERMS
  1. Off-Floor Order

    An investor's directive to buy or sell securities when that directive ...
  2. Commission Broker

    Someone who gets paid by the brokerage company for which he works ...
  3. Floor Trader - FT

    An exchange member who executes transactions from the floor of ...
  4. Deck

    The number of open orders that a broker is working with at any ...
  5. Member Firm

    A broker-dealer in which at least one of the principal officers ...
  6. Trade

    A basic economic concept that involves multiple parties participating ...
Related Articles
  1. Banker Or Broker: Which Career Is Right ...
    Professionals

    Banker Or Broker: Which Career Is Right ...

  2. What Is A “Broker-Dealer” And Why Should ...
    Investing Basics

    What Is A “Broker-Dealer” And Why Should ...

  3. Broker Commissions Are Here To Stay
    Professionals

    Broker Commissions Are Here To Stay

  4. Understanding Order Execution
    Investing Basics

    Understanding Order Execution

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

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

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

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

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

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center