Broker
A licensed intermediary who executes securities transactions on behalf of clients in exchange for a fee or commission.
What is Broker?
A broker is a regulated financial professional or firm that acts as an intermediary between buyers and sellers of securities, executing orders on behalf of clients in exchange for a commission, fee, or spread. In the United States, brokers and broker-dealers must be registered with the SEC and FINRA. Full-service brokers provide investment advice, research, and personalized service—typically charging higher fees. Discount brokers execute trades at lower cost without personalized advice. Online brokers now dominate retail investing, with many offering commission-free stock trading. Brokers must act in clients' best interests under the SEC's Regulation Best Interest (Reg BI) when making investment recommendations. Unlike a dealer who trades for its own account, a pure broker always acts as an agent for the client.
Example
A retail investor opens a brokerage account at Fidelity, a registered broker-dealer. When the investor places a buy order for 50 shares of Microsoft, Fidelity routes the order to an exchange or market maker for execution, acting as the investor's agent. Fidelity earns revenue through payment for order flow rather than a direct commission on U.S. stock trades.
Source: SEC — Investor Bulletin: Brokers and Investment Advisers