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Brokerage Anatomy


Resources: Bank of England Financial Stability Papers | FIA/ISDA documentation |
Trading capacities: Principal | Undisclosed principal Riskless principal | Agent | Undisclosed agent
Broker types: Broker | Dealer | Broker/dealer | Executing broker | Clearing broker | Prime broker | FCM | CCP
Clearing: Clearing overview | How clearing works | What gets cleared? | Who clears? | Clearing documentation

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Strictly speaking, an investment firm which handles client orders for transactions in securities as an agent. To be contrasted with a dealer, who trades in the market as a principal in its own right.

More commonly referred to as a broker-dealer, seeing as most firms act as both.

Curiously one may speak of an executing broker but not an executing dealer, and even if you did, you would be talking of a quite different beast to a prime broker, which is neither, really, a broker or a dealer.

See also