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| Occupation | |
|---|---|
| Names | Stockbroker Investment adviser Share broker Registered representative Trading representative Investment broker Investment adviser Financial adviser Wealth manager Investment professional |
Occupation type | Profession |
Activity sectors | Finance |
Astockbroker is an individual or company that buys and sellsstocks and otherinvestments for afinancial market participant in return for acommission,markup, orfee. In most countries they are regulated as abroker orbroker-dealer and may need to hold a relevant license and may be a member of astock exchange. They generally act as afinancial adviser andinvestment manager. In this case they may also be licensed as a financial adviser such as aregistered investment adviser (in the United States).
Examples of professional designations held by individuals in this field, which affects the types of investments they are permitted to sell and the services they provide includechartered financial consultants,certified financial planners orchartered financial analysts (in the United States and UK),chartered financial planners (in the UK).
In the United States, theFinancial Industry Regulatory Authority provides an online tool designed to help understand professional designations.[1]
(...) This enigmatic business [i.e. the inner workings of thestock exchange in Amsterdam, primarily the practice ofVOC andWIC stock trading] which is at once the fairest and most deceitful in Europe, the noblest and the most infamous in the world, the finest and the most vulgar on earth. It is a quintessence of academic learning and a paragon of fraudulence; it is a touchstone for the intelligent and a tombstone for the audacious, a treasury of usefulness and a source of disaster, (...) The best and most agreeable aspect of the new business is that one can become rich without risk. Indeed, without endangering your capital, and with out having anything to do with correspondence, advances of money, warehouses, postage, cashiers, suspensions of payment, and other unforeseen incidents, you have the prospect of gaining wealth if, in the case of bad luck in your transactions, you will only change your name. Just as theHebrews, when they are seriously ill, change their names in order to obtain relief, so a changing of his name is sufficient for the speculator who finds himself in difficulties, to free himself from all impending dangers and tormenting disquietude.
— Joseph de la Vega, in his bookConfusión de confusiones (1688), the earliest book aboutstock trading[2]
The first recorded buying and selling ofshares occurred inRome in the 2nd century BC.[3] After thefall of the Western Roman Empire, stockbroking did not become a profession until after theRenaissance, when governmentbonds were traded inItalian city-states such asGenoa andVenice.[4] In 1602, the Amsterdam Stock Exchange (nowEuronext Amsterdam) became the first officialstock market with trading in shares of theDutch East India Company, the first company to issue stock.[5] In 1698, theLondon Stock Exchange opened at theJonathan's Coffee-House.[6] On May 17, 1792, theNew York Stock Exchange opened under aplatanus occidentalis (buttonwood tree) inNew York City, as 24 stockbrokers signed theButtonwood Agreement, agreeing to trade five securities under that buttonwood tree.[7]
Up until January 1, 2019, investment professionals that offer financial advice inAustralia had to pass training pursuant toRG146.[8] They must hold anAustralian Financial Services Licence that is overseen by theAustralian Securities and Investments Commission.[9] They are subject tofiduciary obligations.
As of 2019, Australia's biggest online stockbroker wasCommonwealth Securities, other large brokers wereANZ Share Investing,nabtrade andWestpac Online Investing.[10]
InCanada, to be licensed as a "registered representative" or an "investment advisor" and thus be qualified to offer investment advice and trade all instruments with the exception of derivatives, an individual employed by an investment firm must have completed theCanadian Securities Course, the Conduct & Practices Handbook, and the 90-day Investment Advisor Training Program. Within 30 months of obtaining designation as a "registered representative", the registrant is further required to meet the post-licensing proficiency requirement to complete the Wealth Management Essentials course. A registered representative is also required to complete 30 hours of professional development (product knowledge) and 12 hours of compliance training every three year continuing education cycle as set out by the Investment Industry Regulatory Organization of Canada. To trade options and/or futures, a registered representative must pass the Derivatives Fundamentals Course in addition to the Options Licensing Course and/or the Futures Licensing Course, or alternatively, the Derivatives Fundamentals Options Licensing Course for options.[11][12][13]
InHong Kong, to become a representative one has to work for a licensed firm and pass 3 exams to prove competency. Passing a fourth exam results in obtaining a "specialist" license. All tests can be taken with the Hong Kong Securities Institute.[14] After passing all tests, approval must be received by theSecurities and Futures Commission.
Share brokers inIndia are governed by theSecurities and Exchange Board of India Act, 1992 and brokers must register with theSecurities and Exchange Board of India (SEBI). TheNational Stock Exchange of India and theBombay Stock Exchange via brokers, provide an ecosystem to investors to trade in capital markets through various channels - broker offices, investment advisor or screen-based electronic trading system. An individual employed by an investment firm must complete the National Institute of Securities Markets (NISM) exam and apply to SEBI for registration as anInvestment Advisor.[15]
Stock market advisory and research services are highly regulated in India. Only SEBI registered stock advisory and investment research analysts are allowed to do so. The complete details of these authorized persons are available on website of SEBI for protection of investors.
The recognized benchmark designation for investment professionals inIreland is the QFA ("qualified financial adviser") designation, which is awarded to those who pass the Professional Diploma in Financial Advice and agree to comply with the ongoing "continuous professional development" (CPD) requirements. The qualification, and attaching CPD program, meets the "minimum competency requirements" specified by the Financial Regulator, for advising on and selling five categories of retail financial products:
As of 2019,Davy andGoodbody were Irish largest stockbrokers.[16]
InNew Zealand, theNew Zealand Qualifications Authority oversees qualifications. The New Zealand Certificate in Financial Services (Level 5) is the minimum level of qualification necessary to offer investment advice.[17]
InSingapore, becoming a trading representative requires passing 4 exams, modules 1A, 5, 6 and 6A, from the Institute of Banking and Finance and applying for the license through MAS[clarification needed] and SGX.[clarification needed]
TheJohannesburg Securities Exchange rules require that member firms must be under the control of a "qualified stockbroker", who is also anexecutive director of the firm; and branches, likewise managed.[18]The South African Institute of Stockbrokers (SAIS)[19] offers the six exams required to become such, a Certified Stockbroker, or CSb(SA), following 3 years' work experience, and with other educational requirements met.[20] SAIS also offers theFinancial Markets Practitionervocational certification[21] as well as various "Regulatory Recognition" examinations.[22]See also re. "Regulated Positions" and "Registered Persons" atSouth African Institute of Financial Markets.
InSouth Korea, theKorea Financial Investment Association oversees the licensing of investment professionals.
Stockbroking is a regulated profession in theUnited Kingdom and brokers must achieve a recognised qualification from the Appropriate Qualifications list of theFinancial Conduct Authority (FCA).[23]
TheChartered Institute for Securities & Investment (CISI), established in 1992, is the largest UK professional body for investment professionals.[24] It evolved from the London Stock Exchange, has around 45,000 members in over 100 countries and delivers more than 40,000 exams each year.[25]
CFA UK[26] also offers various FCA Appropriate Qualifications.[27] It represents the interests of around 12,000 investment professionals and is part of the worldwide network of members of theCFA Institute.[28]
TheFinancial Industry Regulatory Authority, aself-regulatory organization, regulates investment professionals in theUnited States. Exams that individuals may take for accreditation include theSeries 7 exam, theUniform Securities Agent State Law Exam (Series 63), theUniform Combined State Law Exam (Series 66), and theUniform Investment Adviser Law Exam (Series 65).[29]
Individuals holding some of those licenses, such as theSeries 6 exam, cannot be called stockbrokers since they are prohibited from selling stocks.[citation needed] Selling variable products, such as avariable annuity contract orvariable universal life insurance policy, typically requires the broker to also have one or another state insurance department licenses.
Individuals and firms are regulated by theU.S. Securities and Exchange Commission and laws related to theInvestment Advisers Act of 1940, including laws related tofiduciary.
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