What are brokers/dealers/investors?
Brokers
A broker is an individual/firm that acts as an intermediary between an investor and a securities exchange. Because securities exchanges only accept orders from individuals/ firms who are members of that exchange, individual traders and investors need the services of exchange members. Brokers provide that service and are compensated in various ways, either through commissions, fees or through being paid by the exchange itself.
As well as executing client orders, brokers may provide investors with research, investment plans and market intelligence. Discount brokers execute trades on behalf of a client, but typically don’t provide investment advice while Full-service brokers provide execution services as well as tailored investment advice and solutions.
Brokers register with FINRA, while investment advisers register through the SEC as RIAs.
Investors
An investor is any person or other entity (such as a firm or mutual fund) who commits capital with the expectation of receiving financial returns. Investors rely on different financial instruments to earn a rate of return and accomplish important financial objectives. Investment securities include stocks, bonds, mutual funds, derivatives, commodities, and real estate.
Investors can be distinguished from traders in that investors take long-term strategic positions in companies or projects. Investors build portfolios either with an active orientation that tries to beat the benchmark index or a passive strategy that attempts to track an index.
Institutional investors are organizations such as financial firms or mutual funds that build sizable portfolios in stocks and other financial instruments. Often, they are able to accumulate and pool money from several smaller investors (individuals and/or firms) in order to make larger investments. Because of this, institutional investors often have far greater market power and influence over the markets than individual retail investor.
Types of Brokers
Types of Brokers
There are four main types of brokers. Each of the brokers handles a specific type of purchase or sale of securities.
Prime Brokers:
Prime brokerages, at times referred to as prime brokers, are generally larger financial institutions that have dealings with other large institutions and hedge funds. A prime brokerage generates revenue in a few different ways, which include overall fees, commissions on transactions, and lending charges.
Introducing Brokers:
Introducing brokers help increase efficiency and lower the workload for futures commission merchants. The arrangement allows for specialization where the IB focuses on the client while the FCM focuses on trading floor operations. Introducing brokers play the same role in the futures markets as stockbrokers do in the equities markets. The introducing broker and whoever executes a transaction split the fees and commissions according to some agreed upon arrangement.
Clearing Brokers
A clearing broker is a member of an exchange that acts as a liaison between an investor and a clearing corporation. A clearing broker helps to ensure that the trade is settled appropriately, and the transaction is successful. Clearing brokers not only handle orders to buy and sell securities but they also maintain custody of an account holder's securities and other assets (such as cash in the account) Clearing brokers are also responsible for maintaining the paperwork associated with the clearing and executing of a transaction.
Trustees
When we show up to the present moment with all of our senses, we invite the world to fill us with joy. The pains of the past are behind us. The future has yet to unfold. But the now is full of beauty simply waiting for our attention.
Types of Investors
There are four main types of investors
Qualified Purchasers
A “qualified purchaser” is an individual or a family-owned business that owns $5 million or more in investment. To meet the qualified purchaser criteria, the relevant entity or family-owned business cannot be formed solely to invest in a fund. The benchmark for a qualified purchaser is investments rather than net assets, which is a standard you may be used to seeing for investor accreditation.
Accredited Investors
In the U.S., the term accredited investor is used by the Securities and Exchange Commission (SEC) under Regulation D Rule 501 to refer to investors who are financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. Accredited investors include high-net-worth individuals (HNWIs), banks, insurance companies, brokers, and trusts.
Institutional Investors
An institutional investor is a company or organization that invests money on behalf of other people. These include mutual funds, pensions, and insurance companies to name a few. Due to the massive number of purchases these are considered “whales” on Wall Street.
Investment Advisors
Any person or group that makes investment recommendations or conducts securities analysis in return for a fee. Also known as Stock Brokers. The definition of the term was established through the Investment Advisers Act of 1940. An investment advisor with sufficient assets to be registered with the Securities and Exchange Commission (SEC) is known as a Registered Investment Advisor (RIA)
Important Rules for Brokers/Investors
Important Rules for Brokers/Investors
Types of Offerings
What are offerings?
An offering is the issue or sale of a security by a company. It is often used in reference to an initial public offering (IPO) when a company's stock is made available for purchase by the public, but it can also be used in the context of a bond issue.
An offering is also known as a securities offering, investment round, or funding round. A securities offering, whether an IPO or otherwise, represents a singular investment or funding round. Unlike other rounds (such as seed rounds or angel rounds), however, an offering involves selling stocks, bonds, or other securities to investors to generate capital.
There are 5 essential types of offerings
