DEFINITION of Outside Broker
The term outside broker has several applications in finance. Generally, the term refers to a person who works separately from a firm, group, or exchange.
1. Outside broker can refer to a real estate salesperson and deal facilitator who works for a competing real estate company.
2. Outside broker can refer to a securities broker who does not belong to a major exchange.
3. Outside broker can refer to a securities broker who deals mainly in securities that aren't traded on exchanges.
BREAKING DOWN Outside Broker
1. If a property is listed for sale by ABC Brokerage, any broker who does not work for ABC Brokerage would be considered an outside broker. A transaction in which the same broker is involved in both sides of a real estate transaction and represents both the seller and buyer can create an actual or perceived conflict of interest for the buyer. Therefore, the buyer may prefer to work with an outside broker.
2&3. Not all securities are traded on exchanges because all securities listed on exchanges must meet certain requirements. One such requirement is company size, so an individual wishing to trade in very small companies might require the services of an outside broker.