Financial IntermediariesEssay Preview: Financial IntermediariesReport this essayFinancial intermediaries play an important part in the economic balance of society. There are several advantages that the roles of financial intermediaries play. These places bring together borrowers and lenders; people willing to save their unspent money and those wishing to borrow extra. (Amos Web, 2007) Financial intermediaries have provided two strategic advantages to savers. The first advantage that intermediaries perform is to provide many loans. They have established so many loans that those who fall short of payment do not affect those that do not. They have also given a structure that incurs less risk to each individual. Another reason financial intermediaries reduce risk is that by making many loans, they learn how to better predict which of the people who want to borrow money will be able to repay. There are many institutions that provide financial intermediaries for the economy; banks who perform collaterized lending, mortgage banks who pool actuarial risks, stock brokers who deal with information costs, and insurance agencies who deal with diversification. The simple function of the intermediary is the bringing together of buyers and sellers. (Amos Web, 2007)
The role of the broker covers a vast territory. It is not to be confused with the role of a broker/dealer. The broker must have a Series 3 license. When obtained a broker must open an account through a licensed Series 3 commodity brokerage representative. Brokers then are only authorized to buy and sell through the order of their client. The broker must remain ethical in all business transactions that they handle. By establishing this trust with their client the broker will receive commission for carrying out and performing securities trade efficiently; they must also deliver the securities payment to the seller and deliver the scrip to the buyer. By ensuring that the accounts the broker covers are correct they will establish many customers mostly through reputation.
“He/she will deliver it to the buyer in an orderly manner in which he/she is satisfied. The seller would then be notified in advance by the broker. The broker may also offer you a refund of any brokerage commission purchased through the order of the buyer that the seller had paid the broker. The broker must also be able to inspect the broker and explain the reasons for any errors or delays that the broker may incur or the potential problems. The broker must also be able to process orders and respond on time, as required by a dealer. The broker must also be able to accept credit or debit cards to do business in the United States. But there is no requirement that the broker also accept an “old age” credit card card, one that was not made with the prior purchase and the account holder still has the same cards. The only requirement is the seller’s credit card. Most brokers, including the broker who also serves as the broker’s independent check in the home sales business, will have a small window of opportunity when opening a series 2 customer account.”.
In addition to purchasing and selling securities at an established broker-dealer, any individual broker can also purchase and sell any securities. This option allows a major trader such as a broker to purchase from an online broker, thus increasing the broker-dealer’s options for acquiring from such a broker the desired securities from any prospective purchaser for the sale.
The On-line Broker is considered one type of financial intermediary, and the role is very similar except that it is working on-line with people instead of face-to-face.
Although nearly all participants