Broker Types and Client Representatives

Brokerage labels can refer to a legal firm, an agency capacity, an individual registration, an informal occupation, or a venue-specific execution role. The most useful question is not “Which type sounds best?” but “Who is acting, for whom, in what capacity, and under which rules?”

Brokerage Role Map

Follow the Order, Not the Job Title

A single transaction can involve:

1. a registered representative who receives the instruction;
2. a broker-dealer that owns the customer relationship;
3. an executing broker or market maker;
4. an exchange or alternative venue;
5. a floor broker for venue-specific representation;
6. a clearing broker that completes post-trade functions; and
7. a custodian or carrying firm that records customer assets.

One firm may perform several functions, or each may belong to a different firm. The account agreement, order record, confirmation, and statement provide stronger evidence than a marketing title.

Capacity Questions

Use these questions whenever a broker-related term appears:

• Is the firm acting as agent, principal dealer, investment adviser, lender, or underwriter?
• Is the individual currently registered for the activity being discussed?
• Was the order customer-directed or recommended?
• Who routed, executed, cleared, carried, and custodied the transaction?
• How is each firm or person compensated?
• Which conflicts, product limits, and routing arrangements apply?
• What standard, venue rule, and jurisdiction govern the conduct?

Capacity can change across services and transactions. A dually registered professional may use brokerage capacity for one interaction and advisory capacity for another, but the distinction should be clear.

Common Mistakes

• Calling every financial professional a broker.
• Treating broker, dealer, market maker, and investment adviser as interchangeable.
• Assuming Series 7 is required for every representative or floor role.
• Assuming a floor broker personally maintains the customer’s retail account.
• Treating “commission-free” as cost-free or conflict-free.
• Assuming a traditional firm always provides advice or uses obsolete technology.
• Evaluating a broker from a title or review score without checking official registration and disclosures.

This section provides general market-structure education, not personalized investment, legal, career, or licensing advice. Registration and conduct requirements vary by activity and jurisdiction.

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