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An agency broker facilitates trades on the securities market on behalf of clients. People who use the services of an agency broker rely on the broker to make the best possible deals on their behalf. In exchange for this service, the agency broker collects a fee. The fee is usually a commission based on the value of the transaction, although there may be other associated fees as well. All information about fees must be disclosed when buyers and sellers enter into agreements with agency brokers.
Brokers in general are people who make arrangements between buyers and sellers. In the case of an agency broker, the broker also acts as an agent on behalf of one of the parties in the transaction. This means that the broker is representing the interests of either a buyer or a seller. A client approaches the agency broker to discuss a sale or purchase and the broker must find a way to fill it efficiently and at the best price.
Like other people involved in the securities market, an agency broker is expected to follow the market closely. The workday starts early with reviewing financial news and reports generated overnight. This information is used to understand the position the market is in and to make projections about where it is headed. As clients contact the broker to discuss transactions, the broker records these buy and sell orders in the order book and then works to fill them.
Filling orders can be accomplished in a variety of ways. Keeping the need to get the best price in mind, the agency broker can contact other brokers to connect with their buyers and sellers or deal directly on the trading floor. Brokerage firms usually have representatives at securities exchanges who can execute trades on behalf of their employers. Once the trade is complete, the client is notified and the securities are transferred to the client's ownership.
Agency brokers must keep meticulous records at every step of the way so they can document how they conducted individual transactions. They are liable for transactions performed improperly, such as sales below the price requested by the client. If a broker fails to execute a trade as ordered, the client may have grounds for a suit and the broker can also be fined or otherwise penalized. These securities professionals also have a fiduciary duty to their clients and must protect the interests of their clients in all transactions.
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