Usually, a commission is paid to the stockbrokers, which may constitute a percentage of the purchase of the client or maybe the sale price. However, a lot of them collect a flat fee corresponding to per transaction or can be a mix of the both. Previous to knowing about the actual function of the stockbroker, you are required to know who the stockbroker is. Whenever you like to sell and purchase shares in the stock exchange, you are needed to complete these activities by means of the stockbrokers only.
A stockbroker is said to be a professional person who completes sell and buy orders relating to stocks and also many other securities by means of a stock market or can be over the counter by realizing a commission or a fee. The financial world is full of other kinds of brokers also. For instance, for trading commodities is needed a commodities broker, a floor broker sees to the orders on the floor about a stock, or it can be commodities exchange. On the other hand, the full-service broker provides brokerage facilities or services and also does sell other financial products like tax planning, insurance or research conducted by other members who work in the brokerage house. The best stock broker in India offers all these services. A discount broker does most importantly carry out trades for the customers and does not tend to do anything else. Brokers are different to a research analyst. They analyze and offer advice regarding particular stocks
Importance of stockbrokers
It is only the stockbrokers who are considered very important individuals in any market since they are responsible for bringing together sellers and buyers and consequently give rise to efficiency and liquidity in the market. Nevertheless, commissions of the stockbrokers claim a large part of returns; as a result, investors are advised to opt for a stockbroker who offers a right proportion of services. For example, the additional price of a full-service broker can be said appropriate for those people who have a little knowledge or lack tendency to keep on top of financial planning and also complicated investing. As well, start-ups and those people who have complex portfolio may feel at ease with full-service brokers. It is obvious that investors who are inclined to hold on to their investments for a sufficient time do not feel inconvenience with higher fees or commissions as they do not undertake trade so frequently.
- They form very important financial intermediaries
- These stockbrokers are having registration with the stock exchange and are holders of a license
- They are required to follow the entire set of rules of SEBI
- They offer a platform to the investors to stock exchanges
Hence in short one can infer that the role of a stockbroker is yet very important and in fact over a period when there are lots of sources available in the market, but the reliability of them is still a question, it is only a stockbroker who can be trusted upon for trading.