Who Are Jobbers?
They are professional independent brokers engaged in buying and selling of specified securities in their own name. Jobbers cannot deal on behalf of public and are barred from taking commission. They deal with brokers who in turn transact on behalf of the public. A jobber deals in a limited number of securities which he tracks regularly.
Jobbers make their money by buying and selling shares and derivatives within the stock market. They are not allowed to deal with the public and this is the reason that few people have ever heard of them. Jobbers make their income from the difference in the buying and selling price. This difference is not because the share price has moved, but because the jobber buys and sells the shares at a different price in the same instance.
Jobbers generally quote two prices, one at which he is prepared to purchase and the other at which he is prepared to sell a security. This two way price is known as ‘double-barrelled price‘. The difference between the two prices is known as the ‘Jobbers turn‘. For e.g. a Jobber may quote the shares of ABCD at USD $ 500-501.This implies that the jobber is prepared to purchase the shares at $500 each and sell at $501 each. The difference between the two prices is the jobbers turn.
Who Are Brokers?
A broker also referred to as stockbroker can either be a registered stockbroking company or an individual. They buy and sell securities on their client’s behalf and charge brokerage fees. They act as a vital link between investors and stock exchange by facilitating transactions.
The job of a broker is to introduce a buyer to a seller. The brokerage charges a commission for this service, but is not, otherwise involved in the transaction. The contract of sale is between the buyer and the seller and the brokerage has no obligations within the contract.
Types of Brokers
- Full-Service Stockbrokers: These stockbrokers provide comprehensive services to clients, including providing advisory assistance. They can help an investor gain insight into investment opportunities. Typically, their brokerage fees are based on the total amount of executed trades. These are generally well-established market players, with a range of network offices/branches across the country.
- Discount Brokers: They charge comparatively lower fees as compared to full-service brokers. Their services don’t include advisory assistance or market research to help clients zero in on a suitable investment opportunity. Usually, they charge a flat fee for undertaking stock market transactions.
- Brokers Charging Flat Brokerage: These types of stockbrokers have gained popularity because of the increasing use of digital technology in trading. They are a mix of both full-service and discount stockbrokers, charging a flat rate brokerage fee.
Difference Between Jobbers And Brokers In Tabular Form
|BASIS OF COMPARISON
|Jobber is a person who buys and sells securities in his own name.
|Broker is an agent who deals in buying and selling securities on behalf of his clients.
|A jobber carries out trading activities only with the broker.
|A broker carries out trading activities with the jobber on behalf of his investors.
|A jobber gets considerations in the form of profit.
|A broker gets consideration in the form of commission or brokerage fee.
|A jobber is a special mercantile agent.
|A broker is a general mercantile agent.
|Scope of Dealings
|A jobber is prohibited to directly buy or sell securities in the stock exchange. Also, he cannot directly deal with the investors.
|A broker acts as a link between the jobber and the investors. He trades i.e buys and sells securities on behalf of its investors.
|Jobbers are more active in secondary market.
|Brokers operate in both primary and secondary market.
|Jobbers are generally wholesalers.
|Brokers deal in the retail market.
What You Need To Know About Jobbers And Brokers
- A broker only works on commission and never buys or sells shares on his own account.
- A jobber is barred from accepting commission and never buys or sells share on behalf of others.
- Jobbers make their money by buying and selling shares and derivatives within the stock market.
- Brokers need to get customers in order to make a profit, so they advertise and always look for new clients.
- Jobbers can only deal with a limited number of people and so their business ethic drives them towards building one to one business relationships with the limited number of parties they are ever likely to deal with.
Both jobbers and brokers play a role in stock sales and purchases, but they’re involved in different stages of the process. Brokers carry out transactions for the investors who hire them. Jobbers, on the other hand, exist to make sure that when brokers need to buy or sell shares for a client they have someone to buy from or sell to.