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Why do we need brokers?

Discussion in 'Brokers' started by darkhorse70, Sep 29, 2015.

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  1. darkhorse70

    darkhorse70

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    I'm just curious as to why we actually need brokers?

    I can understand that before the internet, you couldn't have a million people just walk into the stock exchange and place orders, that would be chaos.

    But im assuming now every order is done electronically.

    So I guess my point is, why do you have to pay a broker to be your intermediary?

    Obviously they provide a lot of other functions such as platforms etc with their services but I'm still curious?

    Maybe to use the exchanges network line or?

    Thanks
     
  2. Gringotts Bank

    Gringotts Bank

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    I don't know, but I often think this about real estate agents. The whole thing could be done online, and just hire someone random to wear a suit and show people through on inspection days.

    Maybe a company like Uber will get into real estate?
     
  3. skyQuake

    skyQuake

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    Regulatory and Risk for the most part.

    I suppose exchange and brokers can be combined but there would be conflict and antitrust issues.

    Clearing and settling comes to mind but if everything is issuer sponsored that can reduce the need for a broker.

    From an insto point of view they're still essential - good brokers can get you liquidity and anonymity, as well as stock borrow.
     
  4. Gringotts Bank

    Gringotts Bank

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    Darkhorse Deep Discount Broking.

    Is this where you're headed?

    I wonder what sort of capital you'd need to get going. skc would know.
     
  5. pixel

    pixel DIY Trader

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    Think of a stock broker the way you think of an ISP:
    You need a conduit from your home PC into the www, someone that facilitates your access to all those Millions of websites. Setting up and maintaining that kind of safe conduit costs a lot of effort and money; an overhead no individual web surfer can bear.
    Similarly, no Stock Exchange will allow an unlimited number of "clients" to connect to its network. Orders have to be vetted, clients managed, to ensure an orderly process.
     
  6. Trembling Hand

    Trembling Hand Can be found on the bid

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    Lots. All the little brokers have folded the last few years because of the increase in capital requirements.

    Think it is up to 10 million now. it is somewhere here,
    https://www.asxonline.com/intradoc-cgi/groups/participant_services/documents/manuals/asx018340.pdf

    I can think of a lot better things to be doing with 10 mil than chasing retail trades at $10 bucks a clip.
     
  7. darkhorse70

    darkhorse70

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    Gringott, I guess real state agents are about building trust etc so maybe its a different ball game.

    Haha, nah this ones not a crazy scheme like my others. It's actually a very simple idea but hopefully it provides value to every one. Once its created, I'll let you guys know what its about. For the time being ill have to work my butt off.

    Skyquake, that makes sense, especially the anonymity and liquidity.

    Thanks Pixel, very helpful. Do you mind me stealing that part about the ISP, I'm actually writing an article about brokers and that will be a good example.
     
  8. darkhorse70

    darkhorse70

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    dw TH, its nothing of that caliber. I wouldn't dare take on any task of that size anytime soon or ever.
     
  9. darkhorse70

    darkhorse70

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    However, while were at it, I've got a realy small budget and I need legal advice. Particularly if I need an ASF license and the lawyer quoted me 3.3k just for that. Ive only got a budget of 10k to build the site plus legal fees. Does any one know where I can get good legal help regarding the financial sector without costing me an arm and a leg.

    I just need to ask if the operations of the site is allowed, if not how do I go about it and how do I protect myself.
     
  10. Trembling Hand

    Trembling Hand Can be found on the bid

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    You can have good legal advice or you can have cheap legal advice. You cannot have both. :D:D

    Do the work yourself. It is not that hard to do the background work just by reading the legislation and ASIC gumph.
     
  11. skc

    skc Goldmember

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    I admire your entrepreneurial spirit. But I'd suggest to discuss your ideas with knowledgeable people who you trust, before going too far and use up your limited budget. Get feedback and research what is out there already.

    You don't want to end up like the guys in Knocked Up with their movie website...
     
  12. darkhorse70

    darkhorse70

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    TH, the first thing I did was go on ASIC. The problem was the interpretation part always gets messy. The service which im proposing to offer is not advise but you never know what the hell the government is thinking. I called up ASIC,waited 1.5 hours and when I told the woman my potential plans, she just said go to the ASIC website.

    I was slightly taken back so I lost my chance to properly explain to her my situation. I searched multiple sites and similar business structures but yeah its one of those things which you cant avoid. You just need the legal advise and to get it all sorted.

    SKC, CanOz has been mentoring me for half a year now. So I ran the initial idea by him and things have just snow balled from there. He guides me with whatever he can which is really great.

    And youre right about the budget thing. The stupid part is, my cousin whose my age has also just created his own business and hes specializing in marketing, developing sites with a team his got etc. So im conveying my ideas to him and hes working with me on it but I still havent got legal advise and the projects rolling ahead. Thats the stupidest part of it but I'm sure that there shouldn't be a problem legally.

    In regards to knocked up haha, what about this https://www.youtube.com/watch?v=kSHUha9ABNY
     
  13. sinner

    sinner

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    Either you pay for a seat/membership at the exchange or you trade through someone or a firm who does.

    I think it costs about 2.5 million USD to buy a seat on the NYSE today.

    Membership on the mpex.co bitcoin exchange costs 50BTC, or you can trade through a broker like coinbr.com for 0.019BTC per month.

    Get one and you don't need a broker :)

    Some exchanges may only offer seats/membership to financial corporations and not individuals.
     
  14. darkhorse70

    darkhorse70

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    Thanks sinner, well my entire reason for the question was because im writing up an article and generally people might ask, why do I have to trade with a broker? Why cant I just place an order straight to the exchange and that's what arose my curiosity.
     
  15. Gringotts Bank

    Gringotts Bank

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    They might find that interesting, but keep in mind most people are motivated by money, sex, status and love/relationships. That's where all the traffic goes.

    If I know why I need to use a broker, can I use that to make more money?
     
  16. darkhorse70

    darkhorse70

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    Well the article is being written slightly as a lure and slightly due to context.

    It does have a purpose though, I promise haha.
     
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