Exchange Brokers

An exchange is the act of giving and receiving, typically for the same value, or at least for the perceived value of the items. In other words, trading one thing for another of equivalent value. An exchange can also be a place or medium where people congregate to swap, sell, buy, auction and trade their assets. A flea market is an example of an exchange. A system of barter is another form of exchange. An exchange is the marketplace. Thus, equities, stocks, commodities, futures, and options are sold on various exchanges throughout the world. And, like other financial transactions, the exchanges or trades require licensed individuals called exchange brokers.

Agreeably, there are many types of exchange brokers including foreign currency exchange, over-the-counter exchange, stock exchange, derivatives exchange, and commodity exchange board brokers. FOREX and OTC, however, do not trade on a formal exchange, but rather, through a dealer network. Stocks and commodities, on the other hand, are negotiated on exchanges such as the Boston, Chicago, and New York stock exchanges. The Philadelphia Stock Exchange is the oldest in the US, having commenced operations in 1790. NYSE followed shortly, thereafter, in 1792. And, there have been other regional exchanges that have come and gone through the years. But, one commonality is the existence of exchange brokers. These are real people on the floor of the exchanges, executing buy and sell orders, as well as negotiating with other exchange brokers.

Further, floor brokers or stock exchange brokers should not be confused with floor traders. Each has completely different roles in the exchanges. Floor brokers, generally, execute the orders from their companies. Clients call their individual brokers who give advice whether they should buy certain stocks or sell stocks they own. The individual brokers send the orders to their firms, and from there, they go to the exchange brokers, who carry out all the clients' wishes. Floor traders, on the other hand, are not dealing in client orders, but rather, are purchasing and selling for their own accounts.

NASDAQ is also an exchange, but an electronic medium. Instead of congregating in the same place, exchange brokers work within a framework of computer technology. In addition, these types of brokers are commonly known as "market markers'. They do not necessarily trade on behalf of their clients. In fact, in some instances, they actually own and take possession of the securities. Frequently, they add mark-ups to the price, selling them to investors, for example.

Furthermore, an exchange is the place of liquidity. It is the means by which investors or shareholders can divest themselves of their holdings. Exchange brokers facilitate this process, in accordance with SEC regulations. Obviously, broker licenses are required in order to execute orders. The exchanges, themselves, also offer different forms of protection for investors. While, it is not specifically required that future stock brokers have university degrees, it is to their advantage in most cases, in order to vie for the better jobs. Before candidates are actually accepted to take the General Securities Registered Representatives Examination (Series 7), they need to complete a type of co-op or internship with a firm. Thus, having the best possible résumé will be extremely important.

One last comment about exchange brokers. Although they do command considerable incomes, the positions are fast-paced and demanding. Mistakes are not options.