What is a Contract Broker?
Contract brokers are members of a stock exchange that choose to execute orders for transactions on behalf of another investor who is also a member of the same exchange. An investor may choose to function as a contract broker for several different reasons. In general, the transactions initiated by the contract broker will be routed through the brokerage that the member usually utilizes, rather than the brokerage firm used by the other stock exchange member. One of the more common reasons why a member would choose to facilitate transactions as a contract broker is good old-fashioned time management. Both members wish to engage in the same investment activity associated with a given stock or security. Rather than both members choosing to initiate separate orders, one member receives authorization from the other and places both orders with a brokerage house. Using this approach, both investors have the opportunity to engage in trading according to their wishes, but only one member had to d
