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Broker and Dealer

Broker and Dealer. Group 6. Broker. An agent who acts as an intermediary between buyer and seller, handles orders to buy and sell securities. Commission is charged for this service. Types of brokers. Full service broker

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Broker and Dealer

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  1. Broker and Dealer Group 6

  2. Broker • An agent who acts as an intermediary between buyer and seller, handles orders to buy and sell securities. Commission is charged for this service.

  3. Types of brokers Full service broker • A broker who, in addition to executing trade for its clients, also provides them with research and advice. Discount broker • Brokers who charge lower commission than full service broker, but will not provide the research and advice services.

  4. Types of brokers Floor broker • Execute orders on the exchange floor Upstairs broker • Handle retail customers and their orders

  5. Dealer • An individual or entity when it acts as a market markers, buy and sell for its own account. • Profit is the “bid-ask” spread, that is the price difference where dealer buys for and sells from their own account

  6. Types of dealers Unrestricted practice dealers • A dealer who examine the financial situation in order to make a plan based on the objectives and provide advice as well as buy and sell securities.

  7. Broker Agent No inventory Nothing to do with own account Research and advice ( only Full service broker) Charge commission Dealer Market Marker Own inventory Trade on own account No service provide (except unrestricted practice dealer) Bid-ask spread Differences

  8. Broker/Dealer • Nowadays, broker and dealer is a combined business. • Any individual or firm, which is in the business of buying and selling securities for itself and others. • Most of the big player is broker/dealer

  9. Big players • Morgan Stanley Dean Witter & Co. • Edward Jones Investment • Nomura Holding Securities • ChinaGalaxySecurities • Tai Fook Securities Group

  10. Morgan Stanley Dean Witter & Co. • Famous in providing Prime Brokerage Service • Target customer of prime broker - International hedge fund • Job nature: - clears the trade in different time zone - custodies the securities - provides margin financing - lends stock to cover short sales - provides cash and position reports and technology (research service)

  11. Morgan Stanley Dean Witter & Co. • Morgan Stanley ranked the first to provide prime brokerage service in terms of assets and number of funds served. • Morgan Stanley serves 210 funds out of 1000 funds and accounts for $32.6 billion assets. Source: HedgeWorld survey

  12. Edward Jones Investment • full-service investment dealer • serve the needs of over 5 million individual investors • more than 8,000 branches in Canada, the U.S. and the United Kingdom • more than 25,000 people are employed by Edward Jones in the United States and its affiliates in Canada and the United Kingdom.

  13. Edward Jones Investment • Edward Jones ranked among all firms: • No. 1 in number of offices • No. 4 in number of brokers • No. 5 in number of employees • No. 34 in capital Source: Securities Industry Yearbook 2002-2003

  14. Nomura • Nomura Securities Co Ltd is Japan's biggest brokerage firm • No.1 online brokerage service in Japan, with more than 1/3 online trading accounts Source: First Call.com

  15. Nomura • It overtakes all its rivals, making profit of Y102.8 billion and operating revenue of Y1.1 trillion in 2001 • It has the largest shareholder's equity of Y1.7 trillion, among all the Japanese players. • NikkeiFinancial Dailynamed Nomura the best investment bank in Japan in 2002.

  16. China Galaxy Securities • China Galaxy securing the top spot in the brokerage industry. • China Galaxy ranks first in terms of the registered capital (RMB 4.5 billion) • 5000 staff at its Beijing headquarters • 177 outlets across 29 provinces Source: FinancialAsia.com

  17. China Galaxy Securities • equipped with advanced online trading system – created the advantage of scale • trading volume ranking first among Chinese securities firms. • existing 2.38 million-client base

  18. Tai Fook Securities Group • Tai Fook Securities Group is one of the leading brokerage firms in HK • The group is funded and backed by New World Development Co, Ltd. • Tai Fook Securities Group established representative offices in Beijing and Shanghai. Source: Company website

  19. Tai Fook Securities Group • Tai Fook the first and only securities firm in HK that provides investors with on-line brokerage services • Tai Fook On-line Services is also HKs first and only on-line brokerge awarded the ISO 9002 certification

  20. Industry Trend • Decreasing physical broker/dealer service. • Increasing online broker/dealer service through internet trading system.

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