What is a broker?
So let’s say you’ve decided to buy shares. You have some funds available, and you want to know how to actually buy the stocks you’ve decided to purchase. Well, before you do anything else, you’ll need to set up an account with a stockbroking firm, often referred to as a broker.
A broker is an intermediary who matches buyers and sellers on the sharemarket. For this service they charge you a fee called brokerage, also known as commission. Without one, you cannot buy or sell shares.
Most brokers don’t just process transactions. Many provide research on companies listed on the sharemarket, some provide advice on buying and selling, and some give you access to new issues of shares, commonly known as floats.
Before you buy shares, you’ll need to decide on which services you require. Some brokers provide fewer services than others, but not everyone needs all the services they offer. As with most services, you get what you pay for. Let’s look at the different types of broker.
