What does a Securities and Commodities Broker do?

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A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futuresoptionsand similar financial derivatives.

Clients who trade commodity contracts are either hedgers using the derivatives markets commodities stock broker manage risk, or speculators who are willing to assume that risk from hedgers in hopes of a profit. Ever since the s, the majority of commodity contracts traded are financial derivatives with financial underlying assets such as stock indexes and currencies. When executing trades on behalf of a client in exchange for a commission he is acting in the role of a broker. When trading on behalf of his own account, or for the account of his employer, he is acting in the role of a trader.

Floor trading is conducted in the pits of a commodity exchange via open outcry. A floor broker is different than a "floor trader" he or she also works on the floor of the exchange, makes trades as a principal for his commodities stock broker her own account.

IBs do not actually hold customer funds to margin. They advise commodity pools and offer managed futures accounts. CTAs exercise discretion over their clients' accounts, meaning that they have power of attorney to trade the clients account on his behalf according to the client's trading objectives. A CTA is generally the commodity equivalent to a financial advisor or mutual fund manager. A commodity pool is essentially the commodity equivalent to commodities stock broker mutual fund.

This is the commodity equivalent commodities stock broker a registered representative. From Wikipedia, commodities stock broker free encyclopedia. Retrieved from " https: Commodity markets Commodities used as an investment Brokerage firms. Views Read Edit View history. This commodities stock broker was last edited on 9 Februaryat By using this site, you agree to the Terms commodities stock broker Use and Privacy Policy.

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