Brokered Market

A brokered market involves agents or intermediaries in purchase and sale transactions to facilitate price discovery and transaction execution. Brokered markets often exist in areas of the economy where there is a certain level of expertise required to complete a transaction. In cases where members of the general public do not possess the necessary knowledge to facilitate transactions on their own, brokers, or agents/intermediaries, will be used. Brokered markets include all exchanges where listed instruments are traded, as well as markets for non-listed assets such as real estate. The use of brokers as intermediaries between buyers and sellers aids market efficiency by fostering liquidity, reducing bid-ask spreads and boosting transaction volumes.

Brokered markets are the norm for most transactions, which may span the range from an investor selling 100 shares of a blue chip to a billionaire who wishes to buy a factory in a foreign country. In the former case, either the investor may sell his or her shares through a broker at a full-service brokerage, or online through a discount brokerage; a brokered market is used in either case, since the trade will be executed on a stock exchange. In the latter case, the broker would most likely be a specialist with in-depth knowledge of the country and the assets for sale therein.