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What does a Floor Broker do?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 31 October 2016
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A floor broker is someone who executes deals on the trading floor on behalf of clients of a firm, in contrast with a floor trader, who makes deals on his or her own behalf. These stock market professionals can work for firms of all sizes, and they may specialize in a particular type of commodity, or work more generally in a stock exchange. One of the advantages to working as a floor broker is that one is not exposed as directly to the risks of market volatility when a deal goes badly.

Also known as pit brokers, floor brokers receive orders from their firms and execute these orders on the floor. Their goal is to get the best deal, whether they are buying or selling, for the clients of the firm. Once the order is completed, it is recorded, and the client is informed that the deal has been successfully completed, and what the outcome was.

Working in a stock exchange can be extremely stressful and very hectic. Floor brokers need to be able to deal with a wide range of personalities, and to deal with a fast paced work environment. They also need to have some more basic skills, like the ability to clearly project their voices so that they can be heard over the din of the trading floor, and the aggressiveness to make a good trade and confirm it.

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In order to become a floor broker, someone usually needs to pass an exam which allows him or her to join the exchange. Floor brokers are sponsored by their firms, and they work under the auspices of the companies which employ them, which means that when they make mistakes, the firm pays for them. These mistakes can vary from breaches of protocol which result in fines from the exchange, to a flubbed trade. Too many mistakes can get a floor broker fired, as firms are not interested in bearing expenses for their employees.

Every exchange has slightly different conventions and rules which floor brokers must become familiar with. Many exchanges have classes which are designed to familiarize people with life on the floor and the procedures that brokers and traders need to follow. These classes prepare people for the examinations they must take in order to work.

The level of education for a floor broker varies. Some have no advanced education, progressing on the basis of natural skills and the ability to work from the ground up. Others may hold college degrees in finance and related subjects.

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TreeMan
Post 4

It seems to me like a floor broker acts more like an agent as opposed to a gofer.

Like sports agents, who are loud and try to get as much money for their clients, floor brokers are doing the exact same thing, only they are acting on their clients wishes and are directly responsible for how much money they make for their client.

If the floor broker is not quick or is not able to project their voice well then they could end up costing their client and their firm millions, so there is a lot of pressure and a lot of characteristics necessary in order to become a floor broker.

It is definitely more of a job than being a gofer and may be one of the most important jobs in the arena of stock exchange as they are the ones responsible for actually making the deals on the floor.

jcraig
Post 3

@Emilski - I am sure that there is a lot more to the job than just being a gofer if there is an exam involved and they are dealing directly with clients.

People at stock exchanges making deals and using a floor broker usually have millions and the floor brokers are responsible for making sure that they invest in the right thing at the appropriate time.

That means that there is virtually no room for error and that a person must have at least some advanced knowledge of a stock exchange and know how they can project their voices to make sure that their client is satisfied.

Emilski
Post 2

@matthewc23 - Well, an order to be a floor broker you do have to pass an exam, so that does mean that the person has to have some sort of knowledge as to what they are doing. But, it seems like in order to be a floor broker you may have to be able to simply be someone to express the wishes of a client.

It says in the article that a floor broker has to deal with a wide array of personalities and considering it to be a chaotic atmosphere it seems like the person must be able to handle stress well and be able to act on behalf of their client and do what they want them to do in the stock deals.

It seems more like a job similar to being a gofer than anything, only there is a lot of money on the line.

matthewc23
Post 1

I am wondering if there is a lot expertise needed in becoming a floor trader or if you can simply be someone with a limited knowledge of a stock exchange and can just be a body that acts on behalf of his or her client to make sure that their stock deal is created?

I know little about stock exchanges, but upon reading this article it seems as if that although someone needs to pass an exam to become a floor trader that in reality they are very low on the totem pole and they are more or less acting on the orders of their firm, which may not be horribly complex.

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