What is a Broker: Definition, Types, and How They Work in the Financial World

Jakarta, Pintu News – A broker is an individual or firm that acts as an intermediary between investors and the stock exchange, or as a licensed real estate professional who supervises other real estate agents or an entire real estate brokerage firm.

Check out more information about brokers in this article!

Understanding Brokers

Financial brokers provide securities trading services and get compensated through various means, such as commissions, fees, or payments from the exchange itself.

Real estate brokers, on the other hand, are licensed real estate professionals who usually represent property sellers. They have the responsibility of supervising other real estate agents and managing the overall operations of a real estate brokerage firm.

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Discount Brokers vs Full Service Brokers

Discount brokers can execute various types of trades on behalf of clients, where they charge little or no commission for those trades. Their low fee structure is based on lower volumes and fees. They do not offer investment advice and brokers usually receive a salary rather than a commission.

Most discount brokers offer online trading platforms that attract a growing number of self-directed investors. Such services usually do not charge commissions. In contrast, full-service brokers tend to use their role at a brokerage as an additional service available to high net worth clients, along with many other services such as retirement planning or asset management.

Examples of full-service brokers may include offerings from firms such as Morgan Stanley, Goldman Sachs, or Bank of America Merrill Lynch.

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Broker Regulation

Securities brokers are registered with the Financial Industry Regulatory Authority (FINRA), the self-regulatory body of broker-dealers. In serving their clients, brokers are held to a standard of conduct based on the “suitability rule,” which requires that there be a reasonable basis for recommending a particular product or investment.

These regulations aim to protect investors from unethical practices and ensure that brokers act in the best interest of their clients. Compliance with these regulations is essential to maintaining trust and integrity in the financial industry.

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Broker Example

In the real estate industry, brokers are licensed real estate professionals who usually represent sellers of property. They have the responsibility of supervising other real estate agents and managing the overall operations of the real estate brokerage firm. On the other hand, securities brokers make a salary, working throughout the day to ensure smooth transactions between their clients and the exchange.

Brokers can physically present trades but more often, they monitor trades from their computers and only need to intervene in the case of very large or unique trades.

Conclusion

By understanding the different types and regulations of brokers, property investors and sellers can make more informed decisions when choosing a broker. Choosing the right broker is crucial to maximizing the results of property investments and transactions.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities have high risk and volatility, always do your own research and use cold cash before investing. All activities of buying and selling bitcoin and other crypto asset investments are the responsibility of the reader.

Reference

• Investopedia. Broker: Definition, Types, Regulation, and Examples. Accessed on July 18, 2025
• Featured Image: Generated by AI