Brokerage

What is a Brokerage?

1.    A brokerage firm is an institution, acts as a liaison for individual clients or business entities. The broker is a 3rd party that mediates between any buyer and seller in a given market. 

2.    A broker can also act as a seller or as a buyer to facilitate a principal agent to the deal. The presence of brokers is attached to seemingly any tangible market where deals are made. The following list contains common forms of brokers: insurance brokers, mortgage brokers, joint venture brokers, options brokers, stock broker, real estate broker, retail broker, and an investment broker. 
3.    A brokerage firm profits through the sale or purchase of a good. By mediating and facilitating the transaction, the broker will make a commission on the sell or purchase of the good or service.
4.    A commission is simply a percentage of the total transaction paid to the broker for their services.Brokers are necessary agents in financial or contractual agreements that exist between coordinating entities.
5.    The broker acts asa middle man to facilitate an agreement between a buyer and a seller. For example, in property transactions, a Real Estate Broker will facilitate the purchase or sale of a particular property by showing particular homes or pieces of property to prospective buyers. The Real Estate broker will act on behalf of a real estate company and mediate the sale between the private consumer and the entity offering the property.
6.    In finance, a stock broker can act on behalf of either the buyer or seller. A stock broker will physically purchase or sell the underlying equity on behalf of his or her client who agrees on the transaction.

Brokerage Firm’s Code of Conduct

1.    Brokerage firms must administer a specific code of conduct to ensure the delivery of reliable and accurate information to their clients.
2.    To regulate the market, a broker must pass an examination to prove their knowledge and ensure the ability to broker a deal between two parties.  The examination will test the broker’s ability and overall knowledge of the particular products within their specific industry. In finance for example, a stock broker must pass examinations administered by the Financial Industry Regulatory Authority. The Series 6 and Series 7 exams are the fundamental evaluations which will legally grant an individual the ability to broker financial-based transactions.
3.    The brokerage firm’s code of conduct is regulated by Federal Law and the particular industry’s regulations. Theserequirements must be followed by the particular brokers to avoid termination and punishments such as fines and possible jail time. If the broker is misrepresenting himself or the company(by supplying the transacting party with fraudulent or misinformation for example), he may be liable for a lawsuit in accordance with the laws which protect against predatory practices.
4.    The consumer in a brokerage deal has undeniable rights meant to ensure the delivery of sound, accurate, and moral information; a failure to deliver such information can result in a lawsuit and a settlement for the recoupment of any potential losses.