List of contents

• Introduction
• What is a brokerage house?
• Types of brokerage house
• List of international brokerage houses in Pakistan.
• Roles & responsibilities of brokerage house.
• Brokerage services
• What does a broker do?
• Find the right financial advisor
• Commission
• Brokerage account types
• Opening an account
• Arif Habib Limited
• Company profile
• Vision & mission
• services
• Conclusion

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Introduction
A brokerage house, also called a brokerage firm, is a company licensed to buy and sell
stocks or securities. Acting as an intermediary between buyers and sellers, a brokerage
house typically employs brokers who carry out the wishes of the firm's clients as they
pertain to the trading of stocks. Broker services are usually provided on a commission
basis.
Brokerage house is a place where a broker sits. A Brokerage house must be a member of
Karachi stock exchange where the shares are traded. Brokerage houses must have a
principal office and a head office in the city. These are used for the operations of
business. In addition to commissions, a brokerage firm may charge various other fees.
These fees may include charges for transferring assets, closing an account, and wiring
money. Additionally, a brokerage firm may require the payment of IRA custodian fees, as
well as annual services charges and fees related to periods of account inactivity.
Depending on the policies of the brokerage house, a client's account may also incur a fee
for failing to meet a minimum required account balance. A brokerage house may offer a
variety of investment products or specialize in just one or two. Typical choices include
stocks, mutual funds, and options, as well as government and corporate bonds. Over-the-
counter (OTC) bulletin board stocks may be offered as well.

What is a brokerage house?

Brokerage houses are those financial institutions who provide facility to the general
public for trading of shares. They are just like the agents whose main purpose is to sell
the shares of companies based on commission. So we can also say that they are middle
persons between the client and company. They execute the transactions between client
and company. There are many brokerage house that get the shares of clients who have the
shares of different companies and then they trade with them.

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Types of brokerage house:
• Corporate broker
• Individual brokers
• Transaction brokers
• Real state brokers

• Corporate broker: The corporate brokers are the original brokers of stock
exchange. They work in organized form. The corporate broker houses should
have at least 2 member brokers and they should be well qualified. There are many
corporate brokerage houses are working in the market.

• Individual broker: The individual brokers compromise of only 1 member of stock

exchange. He works on very low level. He is associated with or is a member of or
subscriber to shareholder or connected through a partner or employee with an
other organization, institution, association in Karachi where dealings in securities
are carried on.

• Transaction broker: Transaction broker assists buyers, sellers, or both during the
transaction without representing the interests of either party who may then be
regarded as customers. The Transaction Broker crafts a transaction by bringing a
willing buyer and a willing seller together and assists with the closing of details.
The Transaction Broker is not a fiduciary of any party, but must abide by law as
well as professional and ethical standards.

• Real state brokers: Real state broker is a party who acts as an intermediary
between sellers and buyers of real estate and attempts to find sellers who wish to
sell and buyers who wish to buy. In the United States, the relationship was
originally established by reference to the English common law of agency with the
broker having a fiduciary relationship with his clients. Estate agent is the term
used in the United Kingdom to describe a person or organization whose business
is to market real estate on behalf of clients.

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Famous brokerage houses of KSE
 AKD
 ARIF HABIB
 KHANANI & KALIA
 KHADIM ALI SHAH BUKHARI
 INVEST CAPITAL SECURITIES
 SHEHZAD CHAWNIA
 JAVED UMER BHORA
 LAKHANI SECURITIES

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LIST OF INTERNATIONAL BROKERAGE HOUSES IN PAKISTAN

1. LEADER FOREX (PVT) LTD 5-A, SHERSHAH BLOCK

NEW GARDEN TOWN,
LAHORE
2. AGLAM GLOBAL LINKS ISLAMABAD PUBLICATION (PVT) LTD
(PVT) LTD 9-HAMEED CHAMBER, AABPARA
ISLAMABAD
3. MULTIFOREX 1ST FLOOR RAZIA SHAREEF PLAZA
INTERNATIONAL (PVT) 92-JINNAH AVENUE BLUE AREA
LTD ISLAMABAD
4. PACIFIC RESOURCES 65 EAST PAKPAVILIONS
(PVT) LTD FAZAL-E-HAQ ROAD
ISLAMABAD
5. INTERCOMEX FINANCIAL BASEMENT, JALIL CENTRE
DATA SERVICES (PVT) ABDALI ROAD
LTD MULTAN
6. UNIVERSAL RESOURCES 18-A RIPPLE PLAZA
(PVT) LTD 1ST FLOOR PEOPLES COLONY
FAISALABAD
7. MADINA ENTERPRISES JHANG ROAD, FAISALABAD
(PVT) LTD
8. FOREX MANAGEMENT & KAWISH CROWN, OFFICE # 201-205
CONSULTANT (PVT) LTD PLOT 7&8, DARUL AMAN COOPRATIVE
SOCIETY
KARACHI
9. HILINKS PAK (PVT) LTD KARACHI
10. ROUF INT’L ADVISORY 43-L 1ST FLOOR, GULBERG II
SERVICES (PVT) LTD LAHORE
11. WHITE HOUSE 2ND FLOOR SUITE – 207, BLOCK 9
SECURITIES (PVT) LTD THE PLAZA, CLIFTON, KARACHI
12. GLONEX (PVT) LTD 6 – H, GULBERG HIGHTS,
GULBERG II, LAHORE
13. OFFSHORE GLOBAL 1ST FLOOR, UPPER VALUE MART
MANAGEMENT (PVT) LTD KAREEM BLOCK, A IQBAL TOWN
OGM. HOUSE 56/12 COMMERCIAL ZONE
LAHORE
14. APEX SERVICES (PVT) 1ST FLOOR BLOCK-9, CLIFTON
LTD THE FORUM, PLOT G-10
ROOM # 101-102

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 KARACHI.
15. WORLD BUSINESS 3RD FLOOR, KALMACHOWN
CONSULTANT (PVT) LTD MAIN BELEVARD,
GULBERG, COUNTRY PLAZA
LAHORE.
16. BULLS AND BEARS (PVT.) 2ND FLOOR, AZMAT HOUSE, 32-DAVIS
LIMITED ROAD, LAHORE
17. NOBLE MANAGEMENT 67-B 1ST FLOOR, AL-HAFEEZ CENTRE,
CONSULTANTS (PVT.) GULBERG-III LAHORE
LIMITED
18. SERVICES 2/3 ISHTIAQ PLAZA, COLLEGE ROAD,
INTERNATIONAL (PVT.) SARGODHA
LIMITED
19. OFFSHORE GLOBAL 56/12 COMMERCIAL ZONE UPPER VALUE
MANAGEMENT (PVT.) MART STORE, KARIM BLOCK, ALLAMA
LIMITED IQBAL TOWN, LAHORE.
20. UNITED BROKERAGE 2ND FLOOR, INAYAT ARCADE, 5-PAK
CONSULTANT (PVT.) BLOCK, MAIN BOULEVARD, ALLAMA
LIMITED IQBAL TOWN, LAHORE
21. FUTURE TRADING 13-COMMERCIAL ZONE, KARIM BLOCK,
ADVISERS (PVT.) LIMITED ALLAMA IQBAL TOWN, LAHORE
22. PINDEX (PVT.) LIMITED 95-ABID MAJID ROAD, LAHORE CANTT
23. FOREX LINKS (PVT) LTD HOUSE NO. 15, ROBERT’S ROAD, NEELA
GUMBAD, LAHORE.
24. WALL STREET GROUND FLOOR, PALM BEACH HOMES,
SECURITIES (PVT.) MARINE DRIVE, CLIFTON BLOCK-2,
LIMITED KARACHI
25. TRADE & BROKERAGE A-140, BLOCK L, NORTH NAZIMABAD,
(PVT) LTD KARACHI
26. CFC GLOBAL (PVT) LTD A-602, 6TH FLOOR, AMBER TOWER, BLOCK-
6, PECHS, KARACHI.
27. HARVEST EL-BEENA COMMERCIAL CENTRE, BC-11,
INTERNATIONAL (PVT) BLOCK 5, CLIFTON, KARACHI.
LTD.
28. INTERCOMEX FINANCIAL GROUND FLOOR AFTAB CENTRE
DATA SERVICES (PVT) DAVIS ROAD, LAHORE
LTD

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Roles & responsibilities of brokerage house
• Brokerage houses are market makers, it keeps in contact with the clients to buy
particular shares of any company if their prices are going up and so the investor
can get a higher return.
• Brokerage houses deals in secondary securities than primary securities. They are
crucial to a well-functioning secondary market.
• An other role of brokerage houses is that brokerage houses provide the services of
capital and money market.
• Brokerage houses are responsible to give the financial advices to the clients. They
give them financial advice to buy the shares of which company and what not to
buy. As a broker he knows where is the actually market going. He is responsible
to guide them.

How to open a Brokerage House

 There are some rules and regulations of SECP under these rules a
brokerage house can be formed.

 A huge amount is required. (minimum 15million’s).

 Lot of experience in stock exchange is required.
 (minimum s year’s).

 Well skilled and experienced staff is required.

Brokerage services
A transaction on a stock exchange must be made between two members of the exchange
a typical person may not walk into the Stock Exchange (for example), and ask to trade
stock. Such an exchange must be done through a broker.

There are three types of stock broking services.

• Execution-only, which means that the broker will only carry out the client's
instructions to buy or sell.
• Advisory dealing, where the broker advises the client on which shares to buy and
sell, but leaves the final decision to the investor.
• Discretionary dealing, where the stockbroker ascertains the client's investment
objectives and then makes all dealing decisions on the client's behalf.

In addition to actually trading stocks for their clients, stock brokers may also offer advice
to their clients on which stocks, mutual funds, etc. to buy

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What Does A Broker Do?
Brokers are the people who handle customer orders to buy and sell securities. In the same
way that a grocery store acts as a middleman between shoppers and the companies that
produce food, a broker acts as a middleman between the securities that trade on the
market and the investors who buy them.
We should also mention that the word "broker" can be used in a variety of circumstances.
It could mean an individual person you deal with or it can refer to a brokerage firm such
as Charles Schwab or Merrill Lynch.
The most important thing to realize is that brokers are salespeople. They get a
commission when you trade. This will be our focus in the next section.

Commission
A service charge assessed by a broker or investment advisor in return for providing
investment advice and/or handling the purchase or sale of a security. Most major, full-
service brokerages derive most of their profits from charging commissions on client
transactions. Commissions vary widely from brokerage to brokerage.
The brokerage with the lowest commissions is not necessarily the best one. Discount
brokerages offer no advice, which can prove to be troublesome for many rookie
investors. On the other hand, full-service brokerages offer a more personalized service,
but commissions are much higher.
However, there is the potential for a conflict of interest to develop between brokerages
that charge commissions and their clients. Because commission compensated brokers will
not get paid very much if their clients do not conduct many transactions, unethical
brokers may encourage clients to conduct more trades than necessary.

Find The Right Financial Advisor

When many people think of the term "financial advisor", they picture a stressed out Wall
Street type sitting behind a computer or telephone placing buy and sell orders and
attempting to make their clients as much money as possible. While many advisors may
still fit this mold, some are evolving their practice into a more comprehensive approach
that takes a look at not just investments, but also insurance, budgeting, taxes, retirement,
education funding and estate planning.
As you test the waters to find the right financial advisor for you, you'll need to have a
grasp on the areas in which you are seeking help. You'll then be able to examine your
potential financial advisor before you hire them and determine exactly how skilled they
are in the areas for which you are seeking assistance.
Good financial advisors are compared to "life coaches", because they can help you with
many of your complex financial decisions throughout your life. A financial advisor can
offer tips on buying a car, saving for college and refinancing your home mortgage, just to
name a few. They deal with other financial professionals on a daily basis, and they
typically know if you're paying too much for something or not getting a competitive rate.
Great financial advisors will not only help you make money on your investments, but will
also help you reach your goals and save money on insurance and other major decisions
throughout your lifetime. To maximize your experience with your advisor, you should

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meet with the person quarterly, share your concerns and goals, and allow your advisor to
review all of your financial and legal documents. After all, it's all about trust.

Brokerage Account types

Financial definition : An arrangement between an investor and a licensed brokerage

firm that allows the investor to deposit funds with the firm and place investment orders
through the brokerage, which then carries out the transactions on the investor's behalf.
The investor owns the assets contained in the brokerage account and must usually claim
as income any capital gains he or she incurs from the account.
There are several different types of brokerage accounts and brokerage firms investors are
able to choose the type of brokerage account and broker that best suits their financial
requirements. Some full-service brokers provide extensive investment advice, charging
high fees for their efforts, while most online brokers simply provide a secure interface
through which investors can place trade orders and, therefore, charge relatively low fees
for their services. Brokerage accounts can also differ in terms of order execution speed,
analysis tools used, scope of tradable assets, and the extent to which investors can trade
on margin.

Depending on what type of securities you hold, There are a number of different accounts
you can open at a brokerage house. Margin account and an option account are the most
common types. Each of these accounts are evaluated by the brokerage house and
represent different levels of credit you may receive as the account holder.

Cash account
A traditional brokerage account is a cash account also referred to as a "Type 1" account.
This account requires that you pay in full for all purchases by the settlement date in order
to make trades. If the account does not have sufficient cash already in place you must add
cash to pay for purchases. In the past, brokerage houses would often accept an order to
buy stock in a cash account and after executing that order, they would allow you to bring
the money to settle the trade a few days later. Now with electronic trading, most brokers
require good funds in the account before they will accept an order to buy. Some
brokerage houses may require a deposit as much as $10,000, but outside of that there are
few restrictions on who may open a cash account.

Margin account
A margin account is a type of brokerage account that allows you to take out loans against
securities you own and is sometimes referred to as a "Type 2" account. If this case the
brokerage house is extending you credit and there is a screening procedure to obtain a
margin account. All short sales are required to take place in a margin account.

Having a margin account makes it possible to take a margin loan. You can use a margin
loan for anything you want. The primary uses are to buy securities (called "buying on
margin") or to extract cash from an equity position without having to sell it (thus

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avoiding the tax bite or the chance of missing a run-up). Some brokers will even give you
debit cards whose debit limit is equal to your maximum margin borrowing limit (which is
determined daily). The terms under which you borrow the money (i.e., the interest rate
you must pay and the payment schedule) are determined by your portfolio.

Access to margin accounts is more restrictive when compared to cash accounts. When
you ask for a margin account, your broker will (if he or she hasn't already) run a credit
check on you. You will also have to sign a separate margin account agreement. The
agreement says that the broker can use as collateral any securities held in the margin
account whenever you have a debit balance (i.e., you owe the broker money). Note that if
you have a cash account with the same broker, securities held in the cash account (often
non-margin able securities) do not help (nor can the broker sell them) if you have a debit
balance in the margin account. Conversely, securities in the cash account do not count
towards margin requirements.

Option account
An option account is a type of brokerage account that allows you to trade stock options
such as puts and calls. Because of the risks associated with these types of transactions,
the brokerage will require you to sign a statement acknowledging such. The broker does
this to provide themselves with protection as some brokers were successfully sued by
clients who experienced large losses in options and then claimed they were unaware of
the risks. Otherwise an option account is identical to a margin account.

Types of orders which customers place

In order to make your trade you have to be specific about how you want the transaction to
be performed. The following are common order types you'll encounter when placing an
equity order using an online interface or phone
Market Order:
An order that requires immediate execution at the best price available. These are
generally the cheapest trades to place because there is little work or maintenance
required by the broker.

Limit Order:
An order to transact at a specified price. This guarantees the price at which you will buy
or sell a security. Limit orders are usually more expensive than market orders.

Choosing A Broker

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Deciding whether you need full-service or discount is your first step. The choice is up to
you, but taking charge of your own portfolio can be a very rewarding and profitable
experience.
On the other hand, full-service brokers also have their time and place. Although you'll
pay more, losing money on commissions is better than wiping out your portfolio because
you don't understand the market. The bottom line is that the type of broker you choose
should be based on your individual needs.
The next step is to check the background of the firm and/or broker for any past
disciplinary problems.

Opening an Account

Every brokerage has different terms and conditions for opening an account. There is a
wide range of minimum deposits, varying anywhere from $500 to $2,500. Make sure you
read the fine print beforehand. There is nothing more irritating than spending the time to
fill out application forms only to discover you don't have enough money to open an
account.
So, you're not loaded? Don't worry, more and more online brokerages don't require a
minimum deposit at all.
Another option for those with small bank accounts is a dividend reinvestment plan
(DRIP). A DRIP allows you to circumvent brokers by buying stocks directly from the
companies that offer them.

Commissions and Fees

•
Every brokerage charges a different price (called the commission) to trade. The
price is usually indicative of the service, so cheaper isn't always better.
• The dirt-cheap brokers who charge $5 to $15 per trade get the job done. Prices are
going down all the time and quality is getting better, but don't expect great
support or perks.
• The mid-priced discount brokers typically charge anywhere from $15 to $30 per
trade. These brokers generally offer better customer support and additional
services.
• Expensive brokers come with high costs. In some cases you can expect to spend
upwards of $100 to $200 per trade. These brokers are known as full-service, and
we'll discuss them in greater detail in the next section. The prices above are a very
rough guide. Commissions on trades vary based on things like the type of trade
(e.g. market order versus limit order). Even the method used to do the trade
affects the price; commissions are different for online orders, touch-tone phone.

THE HIDDEN FEES

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In general, the financial industry is excellent at hiding fees and charges under a layer of
jargon. Beyond the commissions per trade, look for the following:

• Fees for transferring assets both into and out of an account

• Account maintenance fees
• Inactivity fees
• Fees for not maintaining a minimum balance
• Interest on margin loans

Sales charges on certain securities (e.g. loads on mutual funds)

Does a broker always have to buy a stock if I want to sell it?

There are certain times when a broker must purchase the stock that you are selling. For
example, if the broker is a market maker, the stock in question is traded on the Nasdaq
and the broker is the highest bidder, that broker has a responsibility to purchase the
shares. However, after purchasing the stock as a market maker, most firms will then
attempt to sell them to another party for small profit
If the stock in question is an exchange-traded stock and the broker-dealer has a trader on
the floor of the exchange (such as the New York Stock Exchange), he or she may
purchase the stock or help facilitate the trade with a third party.
There are also times when the broker-dealer may decide to purchase the stock from you
and add the position to the firm's inventory. This is essentially a compilation of securities
out of which the firm may trade the near term or hold for the long haul. However, it is
important to note that a broker-dealer is under no obligation to buy shares from an
investor but, as a courtesy, many firms will do this, particularly if the number of shares
being traded is relatively small.

On most trades, brokers act as conduits. That is, they will act to sell the stock on behalf of
their clients by making the intention to sell known to all market makers/specialists in the
stock. In such cases, the ultimate purchaser of the shares will be a third party.

Your Broker Acting In Your Best Interest?

As an investor you depend upon your broker for critical information and advice. But far
too often these individuals are more interested in lining their own pockets than helping
you fill yours. So how can you tell if your broker is looking out for your best interests? In
this article, we'll give you some clues to help you determine whether your broker is
looking out for you or if you should be looking for a new broker .

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Unusual or Excessive Trading

The type of account you maintain should reflect the investment style you chose when you
filled out your new account paperwork. In other words, if your goal was capital
appreciation, you should be invested in stocks or mutual funds. If your goal was income,
your funds should be invested in income-generating assets such as bonds. Any
investments that don't fit in with your goals should be considered suspect.

Another big concern is "churning." A good broker will actively manage your account,
however, your broker shouldn't be trading in and out of securities too frequently, or
overtrading, unless you specified your desire that your broker continually trade the
market at the outset of your relationship. Excessive trading generates large commissions,
which will reduce your principal and only serve to make your broker richer.
Again, there isn't a tangible figure that has been defined by the Securities and Exchange
Commission (SEC) or the Financial Industry Regulatory Authority (FINRA, formerly the
NASD).

May Day
Refers to May 1st, 1975, when brokerages changed from a fixed commission for
securities transactions to a negotiated one.Previous to this, commissions were standard
from broker to broker. The elimination of fixed minimum commissions, saw the
advent of discount brokerages which offer lower fees but no investment advice

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A visit to ARIF HABIB LIMITED

ARIF HABIB GROUP

Company’s profile
Arif Habib Limited (AHL) is wholly owned subsidiary of Arif Habib Securities Limited
(AHSL). Mr. Samad A. Habib is Chief Executive Officer who holds masters degree in
Business Administration and have experience of working as Executive Director for five
years in AHSL. The company is the member of Karachi Stock Exchange (G) Limited,
Islamabad Stock Exchange (G) Limited and National Commodities Exchange Limited
and registered with the Securities & Exchange Commission of Pakistan as broker under
Brokers & Agents Registration Rules, 2001.

AHL is a public unlisted company incorporated under the Companies Ordinance, 1984 on
September 7, 2004 and has commenced its operations on December 5, 2005. The

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principal activity of the company is to act as a Brokerage House for buying and selling of
securities. The company has inherited one of the largest brokerage operations on the
Karachi Stock Exchange from its parent company Arif Habib Securities Limited which
was initially carried on by Mr. Arif Habib since 1989. Besides brokerage services AHL
also provides Research services to its valuable clients.

Board of directors
 Samad A habib (chairmain)
 Ahmed raza (CEO & managing director)
 Muhammad yousaf
 Abdullah A rehman
 Syed hassan Jafri

Vision
To be the leading full service securities brokerage and corporate finance company in
Pakistan known for its unmatched client service capacity, voluntary adherence to the
highest ethical standards and insistence on global best practices at all times.

Mission

To provide the fullest range of first-rate, value additive, brokerage, investment advisory
and corporate finance services to clients, fair treatment to all stakeholders, superior
returns to the shareholders, and to make a meaningful contribution to the development
and growth of the capital markets in particular and country’s economy in general.

Strategy
• Prudent investment in service capacity, keeping in mind the ever-changing market
dynamics, client needs and the opportunity-set.
• Client-first approach: all clients must get value for their money; without
exception, they must receive the fastest and best service.
• Set the standards: voluntarily set, and adhere to, the highest standards of
professional conduct; this will also assure peace of mind and fair treatment for all
stakeholders.
• Value-approach: efficiencies, appropriate risk management measures and pricing
strategies should enable profitable operations and good shareholder returns in all
market scenarios.
• The big picture: the company’s social responsibility, and its intended role in the
growth and development of the capital markets, must always be kept in mind in

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 choosing the projects and businesses offered by the market opportunity-set;
considered advocacy at the appropriate forums may also be taken up as a
contributory tool.

Services
Brokerage
AHL’s brokerage operation is among the largest at the Karachi Stock Exchange. It is
characterized by fast, efficient execution that seeks to minimize impact cost for clients.

AHL also acts as an intermediary for the securities financing segment (CFS and Margin
Finance).

Research
With the primary goal of independence and objectivity, we provide our valued clients
timely research to assist their investment decision making. The research team strives to
develop and present a comprehensive picture of the domestic investment avenues and
identify developments in the macroeconomic environment and industry performance
trends. Adhering to the best global practices, we ensure that research and information
dissemination is fair and transparent.

Our ability to stay informed benefits our clients as we provide timely alerts which have
outperformed the market. Our research products include:

• Recommendation List
• Sector analysis
• Company valuations
• Current affairs impacting the business environment

The department consists of qualified and experienced professionals with strong analytical
skills and a firm understanding of the capital and money market operations. The research
department’s strength emanates from human resource quality and access to various
national and international information networks.

Future prospects of AHL

AHL intends to maintain its dominant position in the market as the leading financial
securities firm.The objective is also to enhance operations by exploring new avenues and
additional service generation through implementation of advanced processes and taking
advntage of technological innovation.

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Quote
1. The last price at which a security or commodity traded, meaning the most
recent price on which a buyer and seller agreed and at which some amount
of the asset was transacted.

2. The bid or ask quotes are the most current prices and quantities at which the
shares can be bought or sold. The bid quote shows the price and quantity at
which a current buyer is willing to purchase the shares, while the ask shows
what a current participant is willing to sell the shares for.

This is also known as an asset's "quoted price".

What is the difference between a broker and a market maker?

A broker is an intermediary who has a license to buy and sell securities on a client's
behalf. Stockbrokers coordinate contracts between buyers and sellers, usually for a
commission. A market maker, on the other hand, is an intermediary that is willing and
ready to buy and sell securities for a profitable price.

A broker makes money by bringing together securities' buyers and sellers. Brokers have
the authorization and expertise to buy securities on an investor's behalf - not just anyone
is allowed to walk into the New York Stock Exchange and purchase stocks; therefore,
investors must hire licensed brokers to do this for them. A flat fee or percentage-
based commission is given to the broker for carrying out a trade and finding the best price
for a security. Because brokers are regulated and licensed, they have an obligation to act
in the best interests of their clients. Many brokers can also offer advice on what stocks,
mutual funds and other securities to buy. Due to the availability of internet-based
automated stock brokering systems, clients often do not have any personal contact with
their brokerage firms.

A market maker makes a profit by attempting to sell high and buy low. Market makers
establish quotes whereby the bid price is set slightly lower than listed prices and the ask
price is set slightly higher in order to earn a small margin. Market makers are useful
because they are always ready to buy and sell as long as the investor is willing to pay a
specific price. This helps to create liquidity and efficiency in the market. Market makers
essentially act as wholesalers by buying and selling securities to satisfy the market; the
prices they set reflect market supply and demand. When the demand for a security is low
and supply is high, the price of the security will be low. If the demand is high and supply
is low, the price of the security will be high. Market makers are obligated to sell and buy
at the price and size they have quoted
It is often the case that a market maker is also a broker. This can sometimes create the
incentive for the broker to recommend securities for which he or she also makes a

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market. Therefore, investors should make sure that there is a clear separation between a
broker and a market maker.

Conclusion
One of the most important investment decisions you will make has nothing to do with
which stock, bond or mutual fund you buy. We're talking about selecting a broker.
Hopefully the information in this tutorial will assist you in your search.
:

• Brokers are the people who handle customer orders to buy and sell securities.
• Don't forget that a broker is a salesperson.
• Minimum balances required to open an account range from thousands of dollars
to nothing at all.
• All brokerages charge commissions to execute orders. This fee varies widely
depending on the type of brokerage.
• Look out for hidden fees for transactions like the transfer of assets or inactivity.
• Full-service brokers offer much more, but they're expensive.
• Discount brokers don't offer the extras, but they're affordable.
• Online brokerages have changed the industry by lowering costs and blurring the
line between discount and full-service.
• The type of brokerage you require depends on your investing style.
• It's possible to check the background of all brokers and firms.
• The type of account you need depends on the type of securities you want to hold.
• There are many ways to execute an equity order.

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