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A transaction on a stock exchange or other financial market must be between two members of that exchange - an ordinary person cannot trade stock on an exchange, such trades must be done through a broker.

»Ê¹ÚÌåÓýappre a number of different types of brokers and dealers operating in the financial markets, offering a wide variety of services to clients.

»Ê¹ÚÌåÓýapp most common of these is a broker (or stockbroker). A broker is a middleman who buys and sells shares on behalf of his clients. He earns his income by taking a commission for the transactions he carries out.

»Ê¹ÚÌåÓýapp main services offered by brokers are:

Execution-only dealing - This is the ‘cheap and cheerfulâ€� end of the market. »Ê¹ÚÌåÓýapp investor knows what he wants to buy or sell and instructs a broker to carry out the transaction. »Ê¹ÚÌåÓýapp broker gives no advice or guidance. »Ê¹ÚÌåÓýapp fees paid for this service are likely to be modest, although most brokers will charge a minimum commission.

Advisory service - the broker offers a fuller service which will include advice on which shares to deal in. Investment research carried out by the analysts at the firm may also be available. »Ê¹ÚÌåÓýapp final decision on whether to buy or sell will however still rest with the client.

Discretionary service - sometimes described as portfolio management, where the broker manages the investments of clients. »Ê¹ÚÌåÓýapp broker will ascertain what the investment objectives of the client are so that he can take the right decisions.

In contrast, a dealer is an individual or firm that buys or sells securities as principal for their own account. This is often referred to proprietary trading.

Many firms act in a duel role as a broker dealer, combining the functions of a broker, with that of a dealer, depending on the transaction.