Ask Colin

Is buying and selling shares the same as broking?

The short answer is yes and no. Let me explain. Buying and selling shares is terminology usually used in relation to investors and traders.

These investors and traders can buy or sell in several ways:

They can buy and sell through a middleman called a broker.

They can buy in float, directly from the company.

They can sell in a takeover directly to the offeror.

They can buy and sell through dividend reinvestment schemes, buybacks etc

They can trade off-market by finding their own counterparty and registering the transfer themselves with the share registry for the company (rare)

The most common is the first. Other that the other situations, all transactions are done "on the market" and for this you have to go through a broker. The broker will execute your trade and complete settlement for you. He may also give you advice about investment or trading. In this case he will be called a "full service" broker, as apart from a "discount broker", who only does executions and settlements and does not give advice.

Broking refers to the functions carried out by a broker.

Keyword: