A floor broker is a member of a stock or commodities exchange who executes orders from other brokers on the floor of the exchange. Floor brokers are required to be registered with the exchange. Floor brokers typically work for a particular firm and are responsible for that firm’s trading activity on the floor. They may … Read more
A wrap fee is a comprehensive fee charged by a financial advisor or broker that covers both the services provided and the products used. The term “wrap” refers to the way in which all of the fees are bundled together into a single, all-inclusive charge. Wrap fees can be charged on a monthly, quarterly, or … Read more
The call money rate is the rate at which banks lend money to each other on a short-term basis. This rate is closely watched by financial markets because it is seen as a barometer of the health of the banking sector. A higher call money rate indicates that banks are having difficulty lending money to … Read more
In a dealer market, a broker brings together a buyer and a seller, but does not take on the role of principal in the transaction. Instead, the broker simply facilitates the transaction between the buyer and seller, and does not take on any risk. The dealer market is the most common type of market for … Read more
The COMEX is the Commodity Exchange division of the New York Mercantile Exchange (NYMEX). It is the world’s largest physical commodities exchange, with trading in a wide range of metals and energy futures contracts. The COMEX was created in 1933 as the Commodity Exchange of New York, Inc. (COMEX), with the merger of two smaller … Read more
A broker’s call is a demand by a broker for additional collateral to support a position that has become margined. The collateral may be in the form of cash or securities. A broker may make a call when the value of the collateral has fallen below a certain percentage of the value of the securities … Read more
A fee-based investment is an investment where the investor pays a fee to the broker in exchange for the broker’s services. The fee may be a flat fee or a percentage of the investment. The advantage of fee-based investing is that the investor knows exactly how much they are paying for the broker’s services. The … Read more
Principal orders are those that are placed by the broker on behalf of the client. In other words, the client instructs the broker to buy or sell a security at a certain price, and the broker then places the order with a market maker or another broker. Who are principal trading firms? A principal trading … Read more
A bucket shop is a brokerage firm that allows its clients to place orders directly with the firm, without routing the orders through an exchange. Bucket shops were common in the late 19th and early 20th centuries, when many securities were not listed on exchanges. Bucket shops typically charged higher commissions than exchange-based brokers, and … Read more
The best execution rule is a FINRA Rule that requires firms to seek to obtain the best possible price for their customers’ orders. When acting as a broker-dealer, firms must take reasonable steps to obtain the best market conditions for their customers’ orders. This means that firms must use reasonable diligence to ascertain the best … Read more
