While dealing on the stock market or in any other financial market, investor / trader transacts in the shares through an intermediary known as the broker. Thus, to buy or sell a share on the stock exchange, an investor needs to contact a broker, who in turn is a member of the stock exchanges such as NSE and BSE. This broker would charge a fee or commission for his services also known as brokerage, which is the broker’s income. In simple parlance, broker is a mediator between those willing to buy and those willing to sell. Common examples of broker is a real estate broker facilitating a sale of house or commercial property.
Coming back to a stock broker – who is usually a financial expert having in-depth knowledge of market, market conditions and operations of market. They can sometimes offer their clients advice based on the financial needs of the clients and the risk quotient that the client carries. These Brokers or broking agencies are registered with SEBI and act as intermediaries between the investors and the stock market. Here, it is always advisable to deal with SEBI-registered brokers and financial intermediaries only, as in case of any dispute or conflict, regulations will help settle the case prudently.
When an order is placed by a broker on behalf of a client, it is processed on the exchange. The processing is done by several parties and then the buyers and sellers are matched. The exchange then sends a confirmation to both the parties. The broker plays an important role in the dealing on the stock market. Examples of Brokers in India: Motilal Oswal, Edelweiss, India Infoline, Anand Rathi, Angel Broking, etc. These are large brokerage houses offering a host of other financial products and services such as margin funding, loan against securities, mutual funds, insurance distribution etc. Brokers can be physical establishments like those mentioned above or technologically savvy discount brokerages offering flat fee structure for very low transaction rates like Zerodha etc. where interface is based primarily through a mobile app.