Loading the player...

What is a 'Stockbroker'

A stockbroker, also called a Registered Representative, investment advisor or simply, broker, is a professional individual who executes buy and sell orders for stocks and other securities through a stock market, or over the counter, for a fee or commission. Stockbrokers are usually associated with a brokerage firm and handle transactions for retail and institutional customers. Brokerage firms and broker-dealers are also often referred to as stockbrokers.

BREAKING DOWN 'Stockbroker'

It used to be that only the wealthy could afford hiring a broker to have access to the stock market. However, advances in technology, such as the Internet, gave rise to discount brokers that allowed small investors to trade the stock markets at a small fee. Because of discount brokers, nearly anybody can afford to invest in the stock market, even individuals who are based overseas. One downside to this is the lack of personalized service only a dedicated stockbroker can offer.

Educational Requirements

A bachelor's degree in finance or business administration is typically required for stockbrokers. A deep understanding of financial laws and regulations, accounting methods, principles of economics and currency, financial planning and financial forecasting are necessary to ensure success in the field.

Various Country Licensing Requirements

Different countries have different requirements for stockbrokers. In Canada, would-be stockbrokers should be currently employed by a brokerage firm and are required to complete the Canadian Securities Course (CSC), Conduct and Practices Handbook (CPH) and the 90-day Investment Advisor Training Program (IATP). In Hong Kong, applicants have to be working for a licensed brokerage firm and pass three exams with the Hong Kong Securities Institute (HKSI). However, passing all three exams does not guarantee a license as it still has to be approved by the financial regulatory body.

In Singapore, becoming a trading representative requires passing four exams, Modules 1A, 5, 6 and 6A, administered by the Institute of Banking and Finance. A license is applied through the Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX). In the United Kingdom, stockbroking is heavily regulated and brokers must achieve qualifications from the Financial Conduct Authority (FCA). The qualifications required depend on the duties required of the broker as well as his employer. In the United States, the designation "Registered Representative" is obtained by passing the General Securities Representative Exam, also known as the "Series 7 exam," offered by the Financial Industry Regulatory Authority (FINRA). Applicants must also be employed with a registered brokerage firm.

RELATED TERMS
  1. Series 7

    The Series 7 is an exam and license that entitles the holder ...
  2. Full-Service Broker

    A full-service broker is a broker that provides a large variety ...
  3. Series 72

    The Series 72 is a FINRA licensing exam for individuals who want ...
  4. Registered Representative - RR

    A registered representative (RR) is a person who works for a ...
  5. Series 42

    The Series 42 is an exam and license for financial professionals ...
  6. Series 65

    The Series 65 is an exam and securities license required by most ...
Related Articles
  1. Financial Advisor

    Investment Advisor Versus Broker: How They Compare

    What is the difference between an investment advisor and a broker?
  2. Investing

    Discount Broker

    A discount broker is a stockbroker who carries out "buy" and "sell" orders at a reduced commission compared to a full-service broker, but provides no investment advice.
  3. Financial Advisor

    Should you add a securities license to your qualifications?

    Clients love planners who sell securities, but a securities license takes a lot of work. Learn if the stress and study are worth it.
  4. Investing

    What Is a Broker-Dealer and Why Should You Care?

    Before deciding who to use for help with your investing, learn what brokers, dealers, and broker-dealers are and what services they provide.
  5. Personal Finance

    CFA Vs. Series 7: Which is Easier

    Find out which is exam is easier: The Chartered Financial Analyst (CFA) exam, or the Series 7 securities exam for registered representatives.
  6. Investing

    Brokerage Accounts, Explained

    Brokerages bring together customers or institutions and world financial markets. Here's everything to know about how they operate and what they do.
  7. Investing

    6 Steps to Becoming a Real Estate Agent

    Get a head start in the real estate business by following these six steps.
  8. Financial Advisor

    4 ways to get a head start on your financial career

    Breaking into the finance business is tough, but these tips can help.
  9. Investing

    What Are The Differences Among A Real Estate Agent, A Broker And A Realtor?

    All three work in the real estate field, but there are differences between the job descriptions.
  10. Personal Finance

    Prepare For Your CFA Exams

    Find out how to get yourself ready for these lengthy and often daunting exams.
RELATED FAQS
  1. The life of a stockbroker: a typical day

    One of the great attractions for many that become stockbrokers – also known as investment advisors – is that there is no ... Read Answer >>
  2. How many people fail the series 63 exam every year?

    How many stock brokers failed the Series 63 exam before they passed successfully? Here is what you need to know before taking ... Read Answer >>
  3. What certification series does one need to be a bond broker?

    One major requirement before one can become a bond broker is to pass the General Securities Representative Exam, commonly ... Read Answer >>
  4. What major is required to take the Series 7 examination?

    Find out what educational requirements are needed for the Series 7 exam. Learn about the new Securities Industry Essentials ... Read Answer >>
  5. How many attempts at the Series 7 exam are permitted?

    There is no limit on the number of times you can attempt to pass the Series 7 exam, however, there are restrictions regarding ... Read Answer >>
Hot Definitions
  1. Investment Advisor

    An investment advisor is any person or group that makes investment recommendations or conducts securities analysis in return ...
  2. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  3. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  4. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  5. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  6. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
Trading Center