2.7What is a stockbroker?
1What is it?
A stockbroker is a SEBI-registered member of an exchange who places orders on behalf of investors.
2Why does it exist?
Exchanges only deal with members who meet strict money and technology requirements. Brokers do the KYC, give you the app, check you have enough money, and send your order to the exchange.
3Stock market example
Your broker also issues a contract note for every trade, collects charges and taxes, and reports your holdings to the exchange. SEBI rules require brokers to keep client money separate and settle unused funds regularly.
4Quick revision
- A broker is an exchange member registered with SEBI.
- Handles KYC, orders, margins and contract notes.
- Client money must be kept separately.
5Knowledge check
Q1. What document does a broker send after every trade?Show answer
A contract note.
Q2. Who registers stockbrokers?Show answer
SEBI.
Q3. Give two jobs of a broker.Show answer
KYC, providing the trading platform, sending orders, checking margins, issuing contract notes.