208030
Brokers
- Function
- Arrange trades for clients
- Clearing and settlement among traders**
- Provide access to exchanges
- Provide access to dealers
- Expert traders
- Principal-Agent Problem
- Performance measurement difficult
- Agency responsible for brokers
- Conflict of interests
- Order preferencing certain dealers
(may not be best execution for client)
- Honesty leads to good
reputation = firm survival
- Performance measurement difficult
- Arrange trades for clients
- Market type
- Order flow
- Small to medium size trades
- Order driven or quote driven
- Receive orders and match with orders"es
- Small to medium size trades
- Block
- Large size trades
- Brokered
- Receive order on one side,
search for opposite side
- Large size trades
- New and Seasoned Offerings
- Large size corporation trades
- Brokered
- Sell securities to buyers on behalf of
issuers and holders
- Large size corporation trades
- M&A
- Company to company trades
- Brokered (investment banks)
- Find one or both parties
- Company to company trades
- Order flow
- Firm Type
- Full Service
- Discount
- Deep Discount
- Diff: Commission, Research, Advice and Services
- Full Service
- Firm Structure
- Front office operations
- Back office operations
- Proprietary operations
- Front office operations
- Sources of Profit
- Commissions
- Payments for order flow
- Interest
- Short interest rebate
- Underwriting, M&A & security
lending fees
- Brokerage and commission
recapture
- Commissions
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