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 FASB?9 Views
Finance a la shmoop what is FASB? ok first say it with me people FASB sounds
way cooler than Financial Accounting Standards Board alright well what is it
well it's a private regulatory body that has given birth to myriad opinions on [FASB definition appears on 100 dollar bill]
how things should be accounted for with its favorite child being GAAP.....
yeah, remember GAAP generally accepted accounting principles and it's the
religion of accounting so GAAP was the most famous creation of FASB, but
hundreds of other little creations followed in that the august group of
seven members who run FASB realized 50 years ago that the world would look a
whole lot different half a century later when you were countin beans like who'd have
thunk about digital beans accounting standards would have to be flexible [People stretching in a field]
almost in the same vague way the US Constitution is written so that when a
customer buys an upgrade from the people who make angry birds in an app sold by
Apple but downloaded by Comcast paid for with a Visa card while everyone would
know with certainty who got paid what when the key idea behind FASB is that
it's an adaptive group that changes with a quickly changing bean-counting
environment trying to make sure everything is you know fair and square
for all if you want to think about it in a mathy way well they seek to be the
derivative not the curve itself alright so you're living right here on the curve [Arrow points to derivative on a curve]
changing all the time dxdy and all that crap, FASB....
Up Next
What does a stockbroker do? Stockbrokers use money from investors to invest in the stock market. Their first job is to go out and find these client...
What is AICPA? The AICPA is the American Institute of Certified Public Accountants, or CPAs. It is the group of accountants that basically make all...
What is FINRA? FINRA is the Financial Industry Regulatory Authority. They are responsible for ensuring that financial transactions are done fairly;...