Brokers act as intermediaries and enable their clients to trade financial products at the best price.
In the past, a trader wishing to buy or sell a financial asset had to contact their bank directly to have their request (or order) validated. This sometimes took a long time.
To get around this, companies specialized in intermediation to allow investors to access the stock market more quickly… And brokers as we know them were created ! Confronted with the loss of a part of their clientele, banks reacted and launched "brokerage" services, but the field is for the time being largely dominated by specialized companies.
Today, the stock exchange broker profession consists of placing orders on behalf of an investor clientele, quickly and at the most affordable prices, therefore acting as an intermediary between clients (investors) and issuers of financial products (stock exchanges and OTC sellers).
The broker's main leverage is order volumes, which enable them to negotiate prices with the seller and propose a more attractive offer. But brokers can also offer other services, such as holding and managing client accounts, or delivering financial products and paying the parties involved.
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It should be noted that "brokers" can be individuals, or larger legal entities. Indeed, in many cases, the individual trader will place his orders via a specialized trading platform, managed by the broker. In France, brokers are regulated by the Autorité des Marchés Financiers. Administrative and legal constraints are therefore significant.
For these reasons, some brokers do not operate from France, but from other countries that are less strict. Brokers’ remuneration can be made by charging a commission on the entry and/or exit of an order placed by the client (in compliance with a contract signed beforehand) or by establishing a spread on the passage of each order, i.e. a price difference between the proposed purchase price and sale price.
The value of this spread depends on the liquidity of the market and is expressed in pips. The more volatile the market, the higher the spread set by the broker. Nowadays, using a broker to place stock market orders is unavoidable, hence the importance of getting information and contacting an honest and qualified broker.
