Forex broker or Stock stocks or bonds, listed or
broker will be of great unlisted (over-the-counter),
importance to you In every domestic or foreign, in round
investor's life the "broker" is a lots, odd lots, or piecemeal
figure of prime importance. It is through the Monthly Investment
through him that all securities Plan. He will also buy or sell
transactions are handled; there rights or warrants which, in
is no way you can buy or sell simplest terms, are options to
stocks listed on any national purchase a certain number of
exchange except through his shares of a stock issue. He will
services. arrange the purchase or sale of
In the trade, he is known as a commodity futures grains, coffee,
registered representative, a cotton, soybeans, whatever you
title that has now supplanted the are interested in.
old designation, "customer's
He will place any type of
man." He is a registered employee order you specify: at the market,
of a brokerage firm, preferably limit, stop. He will buy on
one which is a member of the New margin or arrange a short
York Stock Exchange. He is not a sale.
broker as such, but is the
He will be available for
liaison between you, the consultation on the merits of
customer, and the firm's particular stocks or industrial
commission broker who executes groups, or for analysis of your
orders on the exchange floor.
entire portfolio. He will supply
What He Does
stock studies, newsletters,
The representative's job is to market analyses, and whatever
extend to investors all the other literature his firm issues.
services of his firm. He will, He will hold your securities for
first of all, transmit your you in the firm's vault, collect
orders to buy or sell securities your stock dividends or bond
interest, and send you a periodic market. The customers' room in
statement on any shares held for the usual large brokerage house
your ac¬count. has a quotation board on one
His fee: the standard wall. The arrangement of items
commission you pay on the may vary, but basically they all
purchase or sale of securities. offer the same data.
There are no other charges for
For each stock listed—and it
his services (although you will is a pretty large board that
pay interest, naturally, on money shows much more than the leaders
you borrow from him for a margin in any particular group— the
purchase).
quote board will indicate the
What He Doesn't
present and past year's high and
Your representative will not low, the previous day's opening,
and should not serve as a stock high, low, and closing prices,
market tout or tipster. Unless and the successive prices of the
you request him to, he will not current day's sales.
volunteer advice on buying or
There may also be a panel of
selling. He will not choose for commodity prices. Very likely
you between two stocks that seem there will be either a ticker
equally attractive. He will not machine or a projection of its
hustle you into the market and tape on a screen which enlarges
then sell you out; the fast the figures sufficiently for them
turn-around is not his way of to be read across the room. There
doing business.
may also be a Dow-Jones ticker
What a Brokerage House Is which taps out news, statistics,
Like
and whatever economic and
Brokerage houses are pretty financial information the
much like offices everywhere, extensive D-J organization may
except for the presence of the dig up.
fascinating paraphernalia of the
Generally, chairs or benches
are ranged in front of the quote
The accounting department is,
board so that customers may take of course, responsible for
their ease while learning what keeping track of the thousands of
the new day brings.
transactions completed, and for
This is all for your maintaining records of each
convenience. Of course, you can customer's position.
get the same information simply
Many brokerage houses are also
by phoning your broker, but his investment banking firms,
office welcomes your visit.
prepared to share in underwriting
What you do not see is your new securities issued by
firm's research department, companies seeking more capital.
accounting department, and As will be explained in more
vault—though you can if you wish. detail further on, a company
The research department consists issuing stock does not sell
of a staff of securities analysts directly to the public. It sells
who study and report on the the entire issue to a syndicate
performance and prospects of of underwriters, which resells it
various stocks. Many analysts hit at a small mark-up, or "spread,"
the road frequently to examine to the public.
companies firsthand.
In this case, no commission is
Some specialize in oils, charged because the broker's
others in railroads or utilities. expenses and profit on the
Much of their work is continuing distribution are included in the
study of one company after premium you pay. (When 10.2
another, but they are also million common shares of Ford
available for specific analyzes Motor Company were issued in
at a customer's request. (No one 1956, the largest distribution in
will do a special run-down on financial history, they were sold
duPont to see whether you should to a syndicate of more than 700
buy 10 shares, however!)
underwriters at $63 per
share. the currency pairs you are
The price to the public was interested in.
$64.50 per share or a spread of
$1.50. As spreads go, this was
very small—even though it meant a
total of $15,300,000 to the type="text/javascript">
