Stockbroker - Definition, Types, Functions, Roles and Responsibilities (2024)

What is Stockbroker?

A stockbroker is a capital market representative and a licensed agent who executes buy and sell orders submitted by investors. Stockbrokers represent individuals or organizations interested in investing in stocks or have already invested in stocks through the financial transaction. A broker can be an individual or an organization providing information concerning the trade of capital market securities. Just like a marketplace where buyer and seller communicate with each other for trading purposes, a stockbroker works the same as a marketplace and makes communication between buyer and seller of stocks.

Insights About Stockbrokers

In simple words, a stockbroker is a person who buys and sells stocks, more specifically capital market securities, on behalf of buyers. Stockbrokers perform buying functions of securities on behalf of buyers and advise buyers which securities will be best for investment based on the buyer’s investment goal; usually, the main goal of stock investment for most of the buyers is maximizing the money. And maximizing money in the stock market means investing in stocks that have stable stock value growth over the year. Stable growth of stocks in the secondary market means buyers will make a capital gain while selling the stock.

How Many Types of Stockbrokers Are There?

Before investing in any stocks through stockbrokers, it is important to know different types of brokers and their functions.

Traditional or Full-time Brokers

In exchange for commission or fees, full-time brokers offer their advice and services based on their expertise. Full-time stockbrokers perform the basic brokerage functions of creating, monitoring, and managing of investment portfolios of their clients, besides full-time stock brokers offer additional services too. Such service includes the following

  • Tax advice
  • Insurance advice
  • Portfolio analysis
  • Access to IPO shares
  • Helping in financial planning etc.

Discount Brokers

A discount broker is a broker who lets the investors decide the investment strategies and where they will invest. With these types of brokerage, the investors select their desired shares and bonds. Usually, these types of brokers charge less than the full-time broker as they do not provide all the services and tools of investment.

Online Brokers

In this type of stock brokerage, investors can change the position of stock trading through a digital platform; in traditional brokerage, trading takes time as calling and confirming stockbrokers and other formalities make time delay, but in online brokerage, this time gap is minimized.


Unlike brokers, jobber purchase securities in their names, and later when a broker need any share, jobbers sell them the required securities.

7 Roles of A Stockbroker

Stockbrokers have similar to other professionals such as bankers, financial analysts, or investors. We have found out the major roles and responsibilities of a stockbroker.

Trader of Stocks

Buying and selling stocks is the primary job of making stock trading on behalf of its clients. Stockbrokers working as an intermediary make purchases and sales of their clients’ stocks; when a client wants to purchase a new stock, a stockbroker makes arrangements for that purchase. And as a part of this duty, stock brokers also maintain the purchase and sales records of their clients.

Researcher & Adviser

Being the most productive investment market stock market comes with a dangerous environment where the market performance of stocks is ever-changing, and investment in the right stock requires professionals’ advice and well-researched market information. Stockbroker provides market information about the best-performing stocks based on their experience and analysis to their clients. It is common now that most stockbrokers are organizations or agencies consisting of many persons. Stockbrokers usually have their market research team and do technical and fundamental analysis along with another form of analysis to provide their clients with up-to-date information and advice about where to invest to achieve investment goals.

Provider of Personalized Services

Along with basic services and functions, stockbrokers provide different personalized services to their clients, and these services include financial planning, insurance planning, retirement planning, tax services, depository service, and many more.

Provider of Margin Financing

Margin trading is a feature offered by some big stock brokerage organizations with full-time broker service. In this feature, investors can buy more stocks than their actual affordability. Margin trading allows for selling or for buying all the stocks a client one in a day. Margin finance will enable clients to borrow money from a stockbroker and use that money to buy more stocks advised by the brokers. Leveraging their positions, clients can borrow money and purchase more stock, and later on, the borrowed money, along with the interest amount, is paid by the clients. And the position is given back to the client when they manage to pay back the margin amount. Although the margin amount may vary, it usually sticks around 50%.

Investment in Other Asset Class

There are four main types of assets classes are available for capital investment; these are

  • Cash
  • Fixed income securities
  • Equities
  • Derivatives

Besides, some other important asset class includes real-estate investment and crypto currency investment. Stockbrokers not just help to decide and invest in stocks, they also advise other asset classes and their performances.

Investment Portfolio Manager / Management of Clients’ Portfolios

Portfolio management refers to the management of information of invested assets. To minimize the risk of any stock investment, stockbrokers suggest investing in multiple stocks and other forms of assets. And all the legal process and information from all the investment is managed by stockbrokers on behalf of their clients. (

Educational Requirement to Become Stockbrokers

Becoming a stockbroker requires getting a bachelor’s degree in the related field, and many brokerage firms also require one additional post-graduation degree called an MBA and two years of experience in any other brokerage firm. This MBA program prepares a person with more in-depth knowledge of finance and introduces mathematics, statistics, and qualitative analysis.

Along with educational requirements, a person may take training and certification to work as a broker. While doing graduation or post-graduation for brokering, the best way for training is an internship.

Another essential document for a stockbroker is the certificate for brokering. Stockbrokers also need to apply for series 63 certification, and this certification also requires a graduation degree. All other academic courses must be completed as well before applying for certification.

How to Get a Stockbroker License?

Steps to get a license includes the following:

  1. Passing SIE exam
  2. Getting application from a licensed firm for series 7 exam
  3. Registration and Passing series 7 exam
  4. Register and Passing series 63 exam
  5. And passing additional exams

There are many stockbrokers’ licenses available, among which some are mandatory, and some are obtained to increase competitiveness as a job candidate. And the authority that gives these licenses is the Financial Industry Regulatory Authority of a country. Following are the certifications:

  • Series 63 licensure: It is a required license by all stockbrokers, and candidates must apply for it after completing all academic courses of graduation and collecting exam results.
  • Series 7 licensure: It is a licensure for those who want to buy and sell individual stocks. And this license requires completion of academic study as well.
  • Series 6 licensure: This is a limited investment security license; this license is ideal for package investment for making an investment portfolio in the same investment class.
  • Series 3 licensure: It is ideal for those candidates who want to work with commodity futures contracts; It consists of two parts first one is Market knowledge, and another one is Regulatory knowledge.
  • Series 65 licensure: It is an ideal license for those stockbrokers candidates who offer financial consultation based on a financial agreement. This financial agreement can be even working fees per hour or a fixed fee as a charge. This licensing covers topics regarding rules and regulation of the financial market and market knowledge of the economies. Along with these licenses a stockbroker must have some skills to be a successful broker. (

How much Does a Stockbroker Make?

The earning of a stockbroker varies from region to region across the globe, depending on the financial condition. However, in Europe and North America, the average yearly earning of a stockbroker is 66,364 US dollars ( In the Asia Pacific, the annual average earning is 42880 US dollars. ( In the middle-eastern region, especially in the UAE, the salary is around 49000 US dollars. (


Stockbrokers are the intermediaries who deal with trading and advising activities in capital market investment. These activities require license and experience while also offering high annual and monthly earnings to a stockbroker. The job of stock brokering pays a decent amount of money compared to other fields of finance.

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Stockbroker - Definition, Types, Functions, Roles and Responsibilities (1)

Siam Sarwar

I am a curious explorer, exploring the depth of the realm of Business and Economy. Using my insightful theoretical knowledge of the functions of Finance and Accounting functions and how these subjects work in the business world, I uphold my well-researched and well-organized contents containing all accurate information of the evolving business world.

As an expert in finance and capital markets, my extensive knowledge in the field allows me to provide a comprehensive analysis of the concepts presented in the article about stockbrokers.

Firstly, the article correctly defines a stockbroker as a licensed agent who executes buy and sell orders for investors in the capital market. This aligns with the fundamental role of a stockbroker, acting as an intermediary between buyers and sellers in the stock market.

The article then delves into the types of stockbrokers, offering a detailed breakdown:

  1. Traditional or Full-time Brokers:

    • Provide advice and services for a commission or fees.
    • Offer additional services like tax advice, insurance advice, portfolio analysis, and access to IPO shares.
  2. Discount Brokers:

    • Investors decide investment strategies.
    • Charge less than full-time brokers as they provide fewer services.
  3. Online Brokers:

    • Enable stock trading through a digital platform, reducing time delays in traditional brokerage.
  4. Jobber:

    • Differs from brokers as they purchase securities in their names and later sell them to brokers when needed.

The article also outlines the seven major roles of a stockbroker:

  1. Trader of Stocks:

    • Executes buying and selling orders on behalf of clients.
  2. Researcher & Adviser:

    • Provides market information and advice based on analysis.
  3. Provider of Personalized Services:

    • Offers services like financial planning, insurance planning, retirement planning, tax services, and more.
  4. Provider of Margin Financing:

    • Enables clients to buy more stocks than their actual affordability through borrowing.
  5. Investment in Other Asset Class:

    • Advises on various asset classes, not just stocks.
  6. Investment Portfolio Manager:

    • Manages information of invested assets to minimize risk.
  7. Educational Requirement to Become Stockbrokers:

    • Highlights the educational path, including a bachelor's degree, potential MBA, and experience requirements.

The article goes on to explain the process of obtaining a stockbroker license, mentioning exams such as the SIE, series 7, and series 63, as well as additional licenses like series 6, 65, and 3. It emphasizes the importance of these licenses, which are granted by the Financial Industry Regulatory Authority.

Finally, the article touches on the earnings of stockbrokers, noting regional variations. It concludes that stockbrokers, as intermediaries in capital market investment, earn a decent amount compared to other fields in finance.

In summary, the provided article offers a comprehensive understanding of stockbrokers, covering their roles, types, educational requirements, licensing process, and earnings, making it a valuable resource for individuals seeking insights into the world of stockbroking.

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