Assignment

On
Brokerage Activity in Financial Markets

Submitted To:

Debashish Saha
Assistant Professor
Department of Finance & Banking
Jahangirnagar University
Course Title: Merchant & Investment Banking
Course Code: FNB 309

Submitted By:
Kamaru Nazmun Koheli
ID: 1654
Department of Finance & Banking
Faculty of Business Studies
Jahangirnagar University
Savar, Dhaka-1342

Date of Submission:
20th September, 2020
Brokerage Activity in Financial Markets
Brokers Act as Agents
Brokers go about as a middle person between their customers and the trades through which they
exchange. Their obligation is to follow up for the benefit of their customers in making sure about
the most ideal terms for their exchanges. Conversely, specialist vendors purchase and offer
protections to and from their customers so as to produce benefit for themselves. Due to this
critical qualification, it is imperative to comprehend whether a specific broker is acting in an
office limit or as a vendor.
Agent brokers are ordinarily depended upon by bigger customers, for example, venture reserves,
corporate account divisions, family workplaces, and high total assets people. These customers
have remarkable requirements which vary from normal financial specialists. For example,
buying enormous squares of offers regularly requires more mastery in the execution of the
exchanges, so as to maintain a strategic distance from accidentally influencing the cost of the
offers before the position has been set up. Likewise, huge customers may have exceptional
expense contemplations that influence the circumstance or execution of their exchanges.
Brokers can likewise help huge customers by giving some level of obscurity behind their buys
and deals. For instance, if an enormous venture firm starts buying partakes in a specific
organization, the updates on that buy may trigger more open enthusiasm for the stock. This new
excitement might drive up the offer cost and cause the venture company's offer buys to turn out
to be more costly. Thus, the firm may incline toward executing their buys through at least one
office facilitates so the buy is less promptly obvious to different firms.
In spite of the fact that specialist intermediaries can obviously offer significant advantages to
their customers, their mastery includes some major disadvantages. Like specialists and attorneys,
agent agents require long periods of preparing and experience to build up their particular
abilities. Obviously, their expenses are correspondingly high. For most speculators, organization
merchants are probably going to be an uneconomical alternative because of their generally
significant expense.

Market Order
At the point when the layman envisions a regular financial exchange, they consider Market
Orders. These requests are the most fundamental purchase and sell exchanges where a
representative gets a security exchange request, and that request is handled at the current market
cost.
Despite the fact that market orders offer a more noteworthy probability of an exchange being
executed, there is no assurance that the exchange will really experience. All securities exchanges
are dependent upon the accessibility of given stocks and can change altogether dependent on the
circumstance, the size of the request, and the liquidity of the stock.
All requests are handled inside present need rules. At whatever point a market order is set, there
is consistently the danger of market vacillations happening between the time the specialist gets
the request and the time the exchange is executed. This is particularly a worry for bigger
requests, which take more time to fill and, if sufficiently enormous, can really move the market
all alone. Once in a while the exchanging of individual stocks might be stopped or suspended.
A market order that is placed after trading hours will be filled at the market price on the next
trading day.

For example, an investor enters an order to purchase 100 shares of a company XYZ Inc. "at the
market". Since the investor opts for whatever price XYZ shares are going for, his trade will be
filled rather quickly at wherever the current price of that security is at.

Limit Order
Limit orders are intended to give speculators more command over the purchasing and selling
costs of their exchanges. Before putting in a buy request, a most extreme satisfactory price tag
sum must be chosen, and least adequate deals costs are shown on deals orders.
A limit order offers the benefit of being guaranteed the market passage or leave point is in any
event comparable to the predefined cost. Limit orders can be of specific advantage when
exchanging a stock or other resource that is meagerly exchanged, exceptionally unstable, or has a
wide offered ask spread. An offer ask spread is the distinction between the most exorbitant cost a
purchaser is happy to pay for an advantage in the market and the least value a dealer is eager to
acknowledge. Putting in a limit order request puts a roof on the sum a speculator is happy to pay.
For example, if an investor is worried about buying XYZ shares for a higher price and he thinks
that he can get XYZ shares for lower price instead, he will enter a limit order for this price. If at
some point during the trading day, XYZ drops to this price or below, the investor's order will be
triggered and he will have bought XYZ at his preset limit order price or less. However, at the end
of trading day, if XYZ doesn't go as low as the investor's set limit order, the order will be
unfilled.
Traders need to be aware of the effect of the bid-ask spread on limit orders. For a limit order to
buy to be filled, the ask price—not just the bid price—must fall to the trader's specified price.
Floor Broker: Who is Executing Trade
A floor broker is a free individual from a trade who can go about as an intermediary for different
individuals who become over-burden with orders, as an operator on the floor of the trade. The
floor broker gets a request through Teletype machine from his company's exchanging division
and afterward continues to the proper general store on the trade floor. There he joins different
brokers and the master in the security being purchased or sold and executes the exchange at the
best serious cost accessible. On fruition of the exchange the client is informed through his
enrolled agent back at the firm and the exchange is imprinted on the solidified paper feed which
is shown electronically around the nation. A floor broker ought not be mistaken for a story
merchant who exchanges as a head for their own record, instead of as a dealer. Commission
brokers are workers of a part firm.

Specialist Book
Exchanging on a choices trade incorporates various capacities. In contrast to different trades,
similar to a stock trade, the CBOE partitions the assigned market maker (authority) part into two
separate capacities. A market maker, who goes about as a vendor with his/her own stock, and an
order book official, who handles the book of client limit orders.
The market creator posts offer and offers for a given alternatives contract. They additionally can't
manage the general population. They additionally should keep up a consistent market by
continually posting their offers and offers.
The specialist book official monitors these requests for an allocated gathering of alternatives and
ensures the market stays liquid and reasonable. OBOs may not go about as vendors and don't
hold stock. A story specialist is a mediator going about as an operator for customers, by
implication giving them the most ideal admittance to the trade floor. The floor specialist doesn't
hold stock. Public requests take need over requests from floor broker and market maker.

Financial markets brokers or dealers conduct financial market transactions for clients. They
advise individuals about investments, advise companies in search of investors, and conduct
trades in securities. All types of financial dealing firms are increasingly using technology and
online services to record and carry out financial transactions on behalf of customers. However, a
growing number of individuals, self-managed super funds and companies have financial and
equities investments, which will continue to create opportunities in broking and financial dealing
firms.
A Chronological record maintained by a specialist that includes the specialist's own inventory of
securities, market orders to sell short, and limit orders and stop orders that other stock exchange
members have placed with the specialist. It is list of all long and short positions that a specialist
holds. The book also contains all orders by other member firms on an exchange that the
specialist may be able to fill. It is also called simply a book.