Floor Broker (FB)


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.”

BREAKING DOWN '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.

  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. Deck

    The number of open orders that a broker is working with at any ...
  4. Trade

    A basic economic concept that involves multiple parties participating ...
  5. Member Firm

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

    A stockbroker who carries out buy and sell orders at a reduced ...
Related Articles
  1. Professionals

    Banker Or Broker: Which Career Is Right For You?

    Bankers and stock brokers may share similar traits, but there are many differences between the two professions.
  2. Investing Basics

    What Is A “Broker-Dealer” And Why Should You Care?

    For many investors, the financial services industry is a strange and mysterious place filled with a language all in its own. Terms like “alpha,” “beta” and “Sharpe-Ratio” ...
  3. Professionals

    Broker Commissions Are Here To Stay

    With two developed nations adopting a firm anti-commission stance, questions have arisen over whether or not the United States should follow suit. Find out why such a development is unlikely.
  4. Investing Basics

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  5. Personal Finance

    4 Dishonest Broker Tactics And How To Avoid Them

    Protecting yourself from unscrupulous practices means knowing how to spot them.
  6. Insurance

    A Nightmare On Wall Street

    These tales of banking terror sent shivers down the spines of even the most steadfast bankers.
  7. Trading Systems & Software

    The Global Electronic Stock Market

    The way trading is conducted is changing rapidly as exchanges turn toward automation.
  8. Options & Futures

    Brokers and Online Trading

    How do you find the right broker for your investment needs? Start by reading our broker tutorial.
  9. Brokers

    How to Find Wealthier Financial Advisory Clients

    Most financial advisors are eager to add more and wealthier clients to their practice. Here's what it takes.
  10. Professionals

    Career Advice: Stockbroker Vs. Financial Advisor

    Read a detailed comparison between life as a stockbroker versus a financial advisor; find out how the two are different and which one is best for you.
  1. What are some common hand signals on the trading floor?

    " Hand signal" is the sign language used by traders to transmit basic information on the trading floor. The use of hand signals ... Read Full Answer >>
  2. Why are traders on the floor of the exchange?

    Before the advent of electronic trading platforms, the floor of the stock exchange was the location for market transactions ... Read Full Answer >>
  3. What is the interest rate offered on a typical margin account?

    Interest rates on margin accounts vary according to the size of the loan and the brokerage firm being used. Generally, interest ... Read Full Answer >>
  4. What is the cost of a share purchase?

    When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged ... Read Full Answer >>
  5. What is the difference between fee-based advisors and commission-based advisors?

    The difference between a fee-based adviser and a commission-based adviser is that the former collects a flat fee for investment ... Read Full Answer >>
  6. What is the difference between a custodian bank and a mutual fund custodian?

    Custodian banks and mutual fund custodians, commonly known as mutual fund corporations, perform very similar roles for different ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!