Stockbroking definition

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Stockbroking is a service which gives retail and institutional investors the opportunity to buy and sell equities.

Stockbrokers will trade shares both on exchange and over-the-counter, dependent on where they can find the best price and liquidity. Stock exchanges place strict regulations on who can trade shares directly on their books, which is why most individual investors hoping to trade shares will do so via a stockbroker.

Typically, a stockbroking firm will charge commission on the trades it makes on a client’s behalf, or a fee for retaining its services.

There are several different services a stockbroker can provide:

  • Execution-only stockbrokers will complete orders on your behalf, but do not offer any advice
  • Advisory stockbrokers will offer advice on where to trade, but only trade on orders submitted by you
  • Discretionary stockbrokers will trade on your behalf, executing trades without your input

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