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Simple English definitions for legal terms
commission broker
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A quick definition of commission broker:
A commission broker is a person who helps others buy or sell things, like stocks or goods. They don't own the things themselves, but they help others make deals and earn money for doing so. Commission brokers can work in different fields, like securities or real estate. They get paid for their work and act as intermediaries between buyers and sellers.A more thorough explanation:
A commission broker is a type of broker who is a member of a stock or commodity exchange and executes buy and sell orders for clients. They earn a commission on each transaction they make on behalf of their clients.
For example, if a client wants to buy 100 shares of a particular stock, they would contact their commission broker who would execute the order on the stock exchange. The commission broker would earn a commission on the transaction based on the agreed-upon rate.
Another example would be a client who wants to sell a certain amount of wheat futures. They would contact their commission broker who would execute the order on the commodity exchange and earn a commission on the transaction.
Commission brokers are different from other types of brokers, such as discount brokers or full-service brokers, because they only earn a commission on each transaction and do not provide additional services such as investment advice or research.