About Stock Broker

Stockbrokers are the James Bonds and the Avengers of the financial markets. It requires a unique combination of skills of numeracy, sales and nerves of steel to be a stockbroker.The Wolf of Wall Street, here are some tips on how to go about pursuing a career in this field.

If you are someone who likes to stay updated with financial news, enjoys taking calculated risks and wishes to live the high life of Leonardo DiCaprioplaying the character ofstock broker Jordan Belfort in the movie The Wolf of Wall Street, here are some tips on how to go about pursuing a career in this field.

The term stock broker is infrequently used these days. Registered representative, investment advisor or broker are the names most often used to define and address stock brokers. Even brokerage firms and broker-dealers are also sometimes referred to as stock brokers. Depending on the licence of the individual, stock brokers can buy and sell orders for stocks in the stock market for retail and institutional customers for a fee or commission. Usually associated with broker age firms, Stock brokers are often of three different types - discretionary (who manage investments and making decisions for their clients), advisory (who only offer advisory services to clients) and execution (who only carry out the orders of their clients for buying and selling and do not offer any advice.) In India, stock brokers can work as full-service brokers or as discount brokers.

Although the terms stock broker and financial advisor are often used interchangeably, there is quite a difference in their job profiles. Most importantly, unlike financial advisors, stock brokers do not have a fiduciary (a legal or ethical relationship of trust) duty towards their clients although they are responsible for generating revenues for their clients by selling suitable stocks options.

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Different countries have different rules and requirements for becoming a stock broker. In Canada, aspiring stockb rokers should be working with a brokerage firm while applying and should complete the Canadian Securities Course (CSC), Conduct and Practices Handbook (CPH) and a 90-day Investment Advisor Training Program (IATP). In Hong Kong too, stock broker applicants should have a job in a licensed broker age firm and then must pass three testsfrom the Hong Kong Securities Institute (HKSI). In Singapore, an aspirant stock broker (known as trading representative) requires passing the Modules 1A, 5, 6 and 6A exams administered by the Institute of Banking and Finance. One can then apply for a licence at the Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX).

In the UK, stock brokers must achieve qualifications from the Financial Conduct Authority (FCA) before they start practising. In the US, aspirants can secure a Registered Representative licence by clearing the General Securities Representative Exam (Series 7 exam) offered by the Financial Industry Regulatory Authority (FINRA). The applicants must also be working with a registered broker age firm at the time of application.To become a stock broker, apart from the Series 7 exam, one must also clear the Series 63 or the Series 66 exams.

In India, a graduate degree (21 years of age) with two years of work experience in a stockbroking firm is the minimum eligibility criteria for becoming a stock broker. To be a sub-broker (a step before becoming a broker), applicants only need to have a high school qualification.

The best path to follow in order to become a stock broker is to pursue a bachelor's degree in Finance / Mathematics /Accounting / Economics / Business Management that will help you acquire a deep understanding of financial laws and regulations, accounting methods and principles, financial planning and forecasting, and the fundamentals of economics and currency. An MBA in Financial Markets degree or a postgraduate degree in finance will help you have specialised knowledge of the field. However, a postgraduate or an MBA degree is only an added qualification and not a mandatory one. You must then get yourself certified according to the laws of the country you plan to work in. For example, in India, you should take a certified course in stock brokering offered by the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and some other institutes. Some of the certificate courses are offered are:

NSE’s Certification in Financial Markets, NSE’s Certified Market Professional, Certificate Programme on Capital Markets, PG Diploma in Capital Market and Financial Services/ Fundamentals of Capital Market Development These courses give a detailed insight into capital markets and investment, equity research, and securities and portfolio analysis. Once you complete the course, you should register as a stock broker with SEBI and also become members with NSE and BSE and the other exchanges you want to trade at. Registering with the stock exchanges involves playing a security deposit and a membership fee.

Career Prospects

The US has two of the biggest stock exchanges in the world – the New York Stock Exchange and the NASDAQ. The London, Tokyo, Euronext, Frankfurt and Shanghai stock exchanges come next. Millions are traded on these stock exchanges every day. And it is impossible to conduct high-level business in these places without a stock broker.

In India, there are over 5000 companies listed on the BSE and around 2000 in the relatively new NSE. More than 5000 brokers and over 500 investment bankers are registered with SEBI who work with the stock exchanges namely - the Bombay Stock Exchange (BSE), MCX Stock Exchange Ltd (MCX-SX), National Stock Exchange (NSE) and the Calcutta Stock Exchange. Market value-wise, the BSE and NSE are rated 10th and 11th globally. With the rate of increase in market capitalization of Indian companies, the BSE and NSE will soonsurpasssome of the world’s top stock exchanges. In a nutshell, the career prospects are bright for a stock broker.

As a stock broker, you will be responsible for staying updated with the financial markets, researching and strategizing on the most suitable stocks for trading on behalf of your clients, liaising and networking with investment analysts to know more about potential markets and passing on instructions to traders about market prices.

In India, you can work as a full-service broker (with ICICI Direct,Sharekhan, etc.) or as a discount broker (with broker firms like RKSV or Zerodha). With some guidance and mentoring, the technical knowledge and skills of a stock broker can also be used to become a financial manager, analyst or even a market specialist. It is easy for stock brokers to find employment in:

  • Broking firms
  • Large businesses
  • Insurance companies
  • Investment banks
  • Pension funds
  • Traditional banks dealing with broking firms
  • Magazines and news papers
  • Investment consultancies
  • Foundations
  • Mutual funds
  • Other financial institutions
  • Research
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Jobs & Salary

Stock brokers work closely with their clients. Securing new clients, managing their financial portfolio, pitching to them suitable stock options, monitoring their investment and reporting to them are just some of the typical tasks of a stock broker’s workday schedule. Following are some of the profiles that stock brokers can work as:

Financial Advisers & Managers
Capital Market Specialists
Accountants
Security Traders & Sales Representative
Securities Broker

Some of the top companies in India that employ stock brokers are:

HDFC
ICICI Direct
Indiabulls
Kotak Securities Ltd
Karvy Consultancy

Some of the top companies in India that employ stock brokers are:

In many organizations in the US, stock brokers are paid by the hour. On an average, the salary of a stock broker ranges between $11.95 per hour for Sales Representative to $21.24 per hour for Examiners. Floor representatives who get paid a monthly salary make around $3,600 a month. Stock brokers with some experience make around $4,000 a month. In India, the average pay for a stock broker ranges from Rs. 11,000 (at entry level) toRs. 125,000 (for experienced stock brokers.)

Pros & Cons

As high profile as the job sounds, managing other people’s money can be challenging. To become a successful stock broker, you must have an analytical mind, good business acumen, ability to think logically and solve complex mathematical problems. Lastly, you must have patience and confidence to inspire the same from your clients.

Pros
  • Job security – as long as there are financial markets, there will be a need for stock brokers.
  • Stock brokers get many opportunities to advance their careers.
  • Even if the base salary is not very high, stock brokers make reasonably good money through commissions and bonuses.
Cons
  • Long stressful hours of work.
  • A bad financial market can negatively impact your personal finances.
  • You might have to deal with irate customers when cold calling for sales.

Famous Personalities

Jim Rogers

The Chairman of Rogers Holdings, James Rogers, Jr. was the co-founder of the Quantum Fund (along with George Soros.) The company gained a whopping 4200% in 10 years. Rogers is renowned for his accurate bullish predictions on commodities during the 1990's. He is the author of six world travel books of which ‘Investment Biker - Around the world with Jim Rogers’ is most famous.

John Paulson

One of the few people who benefitted from the US subprime mortgage lending market fiasco, John Paulson is an American investor and a hedge fund manager whomade approximately $4 billion in 2007 using credit default swaps to short sell. He is one of the most popular names in high finance and is a person who built one of the biggest fortunes in the American financial markets.

Nithin Kamath

The founder of Zerodha (online-only Indian discount stock broker age firm), Nithin Kamath is an Indian stock broker and Internet entrepreneur. His firm’s daily retail trading turnovers cross $1 billion. He has been awarded the Ernst and Young - Entrepreneur of the year (2017) and Confederation of Indian Industry’s Emerging Entrepreneur Award.

Timeline

1875 In US, the Native Share & Stock Broker's Association is formed

1929 The Dow in the US crashes at the onset of the Great Depression

1949- 1966 Bull market in the US as the Dow posts impressive growth after the Second World War

1957 In India, BSE is granted permanent recognition under Securities Contracts (Regulation) Act (SCRA)

1982 - 2000 Another Bull market in the USasthe index grows more than 1,500%

1986 In India, the country's first equity index - S & P BSE SENSEX is launched

1992 SEBI Act in India is established that protects, develops and regulates the securities market

1993 NSE in India gets recognised as a stock exchange

1999 Interest Rate Swaps (IRS) / Forward Rate Agreements (FRA) becomes permissible in India

2000 Equity Derivatives is introduced in BSE

2001 Stock options are launched in BSE

2005 BSE becomes a corporate entity

2008 Currency Derivatives is introduced in BSE

2009 NSE launches Mutual Fund Service System (MFSS).

2010 BSE is first to introduce Mobile-based Trading / NSE launches trading in Currency Options

2012 BSE - SME Exchange Platform is launched

2016 BSE announces the commencement of trading of Sovereign Gold Bonds / NSE launches NIFTY 50 index futures trading on TAIFEX

2016 BSE becomes India's 1st listed Stock Exchange


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