What is brokerage

As you know, all activities on the securities market, carried out professionally, include several types of activities. These include brokerage and dealer activities; activities involving the management of securities; clearing; depository activity; maintaining the register of owners of securities; organization of securities trading in the market and some other activities. Let us dwell in more detail on such a concept as brokerage.

Brokerage is the activity of civil law transactions. The objects of transactions are securities, and a broker acts as a commission agent or attorney, and acts on the basis of a commission agreement or order. In addition, brokerage, or rather, its implementation requires a power of attorney to perform such transactions, if the contract does not indicate the authority of a commission agent or attorney.

A broker is a participant in the securities market that is engaged in brokerage activities.

Today, brokering is in most cases the prerogative of commercial organizations created in the form of a limited liability company or joint-stock company. In our country, government agencies also engage in this type of activity . In particular, Sberbank of Russia provides brokerage services , performing operations with securities on behalf of and at the expense of customers.

A legitimate brokerage activity requires a license confirming the right of a securities market participant to engage in professional transactions.

The distinguishing features that characterize brokering in comparison with other types of professional activities carried out on the securities market include the fact that brokers can make reassignment transactions, but only if this is specified in the contract. Also, reassignment is possible in cases where the broker is forced to do so by force of circumstances and if it is otherwise impossible to protect the interests of the client. The client in the latter case must be notified of the broker's intention to complete the reassurance transaction.

The broker's responsibilities include conscientious execution of customer orders in the order they are received. The main responsibilities of the broker also include:

1. The obligation to inform the customers of all the necessary data related to the fulfillment of the instructions of the latter and the fulfillment of the obligations stipulated by the contract of sale of securities. For example, a broker does not have the right not to recommend a transaction to a client if the latter has not received full information about the risks associated with it;

2. Security and accounting of customer securities. This is carried out within the time specified by the contract. In addition, the broker has the obligation to submit to the client reports on the progress in fulfilling the terms of the contract, as well as statements indicating the movement of securities and cash on the client's accounts;

3. Taking measures to ensure the confidentiality of customer data, in particular his name, payment details, as well as other information that was received in connection with the fulfillment of obligations stipulated by the contract with the client.

Work in the stock market may be accompanied by situations when a conflict of interest begins between the broker and the client. In such cases, the broker is obliged to notify the client of the interest. If this obligation will be ignored by the broker, and the client as a result will incur losses, the latter will have every reason to demand compensation from the broker. Compensation is carried out in the manner prescribed by civil law.

Source: https://habr.com/ru/post/A11763/

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