First, let's talk about what a broker is. A broker is a person, or a firm, that makes investments based on the wishes of the investor. They can advise, or simply do what the investor says (buy this, sell that, sell when it gets to this rate, etc).
Brokers form associations with other brokers who use the same exchange system they do, like the New York Stock Exchange (NYSE). Exchanges can be physical places (think those scenes in Wall Street movies where people are waving bits of paper and yelling) or virtual (there could still be yelling, but probably on a smaller scale). Typically, the broker must first join the exchange to become part of the association that forms around it. The purpose of the association is to share resources, especially for individuals or smaller firms. The members share the work of taking and executing orders, and share in the cost and profit of those orders.
Associations can be state based; for instance, Michigan has its own: The Michigan Business Brokers Association (MBBA). They can also be international, such as the International Business Brokers Association (IBBA), which was formed in 1983 and now has members all over the world.
Broker associations can even have a specialized purpose, like the National REO Brokers Association. This group works together to manage all aspects of the very specialized process of getting people who experienced foreclosure back into homeownership.
Think of broker associations like The Order of the Phoenix in the Harry Potter series: a group of people with magical skills coming together to wave their financial wands and produce results.
Related or Semi-related Video
Finance: What is FINRA?5 Views
finance a la shmoop what is FINRA? Financial Industry Regulatory Authority
once again for those in the back that's Financial Industry Regulatory
Authority FINRA it's kind of a yoga mantra thing because firms get FINRA'd [Woman meditating with yoga]
every day well FINRA is the private agency that
regulates exchanges and brokerage firms that are members they administer tests
and actually create them you know like these the series exams which we just [Series exams appear]
happen to have shmoop if you've got 70 to 80 spare hours and want to give them
a looksie... think about all the bad PR that sleazy financial wheeler-dealers [Financial dealers discussing matters]
got back in the 1930s before the various acts were enacted you know the 33 34 40
nobody was gonna trust "Wall Street people" unless there was a kind
of Good Housekeeping Seal of fair-and-square dealers who made sure
that the various laws and compliance things were actually upheld..Note,
importantly that it isn't the job of FINRA or well any government body to
recommend buying selling or holding any particular security because you're gonna
make money it's only their job to be sure that the letter of the law is [Letter of law appears]
followed and that that letter is presented in a way so that everyone has
fair access to relevant and similar information it's all about making a fair
and square level playing field for all without that well Manhattan would look a
lot more like Mogadishu than Manhattan [Manhattan skyline appears]
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