Board Broker

What Is a Board Broker?

A board broker is a member of a commodity or options exchange who is responsible for matching and executing orders as well as giving different market-production services.

Board brokers involve a comparable job as the experts employed by stock exchanges, for example, the New York Stock Exchange (NYSE).

How Board Brokers Work

Board brokers are employees of a commodities or options exchange, which satisfy a job that blends parts of market making and stock brokerage services. Generally, board brokers are accused of keeping an orderly trading environment at the exchanges where they serve.

Board Broker System

Maybe the most common illustration of board brokers were those operating for the CBOE. Nonetheless, the supposed Board Broker System of the CBOE was in the long run supplanted by a completely automated electronic trading system.

Normally, board brokers will be assigned a set of commodities or options for which they are responsible. Different members and market participants will depend on the board member to match their orders and to guarantee that adequate liquidity is kept in control to execute their trades.

In circumstances where the demand for a given security far surpasses its supply, board brokers are expected to sell from their own inventory to assist with adjusting supply and demand. Alternately, assuming supply overwhelms demand, the board brokers might purchase the security being referred to add liquidity to that segment of the market.

Different services given by board brokers incorporate offering price citations for the securities in their portfolio, particularly toward the beginning and end of trading meetings or in conditions where the security faces surprisingly low trading volume.

Real World Example of a Board Broker

Michaela is a board broker working for a large commodities exchange who is responsible for managing trade execution and market liquidity in the oil and gas futures market. As part of her job, Michaela keeps in close communication with market participants who might wish to trade large blocks of securities in these commodity gatherings. By discussing straightforwardly with brokers on one or the other side of these transactions, she can assist with marketing participants track down the best potential executions on their orders.

Notwithstanding her order satisfaction job, Michaela likewise assumes the part of a market maker. On the off chance that liquidity in a given commodity turns out to be uncommonly low, she will sometimes mediate to bring supply and demand into closer balance. Essentially, she likewise helps orderly trading by giving continuous price citations, particularly for thinly traded securities for which the current market price might be hard to perceive.

Features

• They were widely utilized by the Chicago Board Options Exchange (CBOE) however have become more uncommon in recent years.
• The elements of board brokers have progressively been adopted via automated trading platforms, for example, those utilized by the Nasdaq exchange.
• Board brokers are employees of commodities or options exchanges responsible for order satisfaction and market-production duties.