ASPECT | JOBBER | BROKER |
Meaning | A jobber is a person who trades securities from their own account. They buy and sell securities on the stock market in his own name with the expectation of earning profit from the difference of prices. Jobbers do not handle clients or represent others. | A broker is defined as an intermediary who conducts trades on the behalf of clients, meaning he himself does not trade in any accounts but helps in creating a trade between the market and the client and receives a commission for every trade he completes. |
Nature of Trading | Jobbers deal only with brokers and never with the direct public investors. The limitation forces the jobbers to maintain contact with the market rather than individual investors. Their primary motive is to buy low and sell high and thus making a profit out of the difference in the market price. | Brokers are agents that represent clients (general public or any institution) in the stock market and conduct trades on behalf of their respective clients. The jobbers and other market participants will be contacted in performing these tasks in which brokers would look for better prices and market opportunities for their clients. |
Restrictions on Dealings | A jobber cannot directly interact with the investors or trade securities on behalf of others in the stock exchange. They can only transact with the brokers, which makes them a specialized participant focused solely on market-making rather than client services. | Brokers are intermediaries who connect the jobbers and the investors to the stock market. They thus bridge the gap between the market (jobbers) and the investors and assist in the very efficient execution of the buy and sell orders for the investors. |
Type of Agents | Jobbers are “special mercantile agents.” They act in a niche role in that they specialize in wholesale market trading rather than providing general, all-purpose services. | Brokers are “general mercantile agents.” They act on behalf of their clients by looking to purchase and sell securities based on client instruction. In this kind of agency relationship, the client’s interests become a concern over which the broker has responsibility. |
Form of Compensation | A jobber makes profits upon the difference in buying and selling prices between the market. There is no commission or fee paid to the clients but profit directly by selling securities at a much higher price than their purchase price. | The earnings of a broker are in the form of a commission or brokerage fee for every transaction conducted for clients. Fixed by the regulations of the stock exchange, the brokerage is fixed and therefore always stable. |
Amount of Compensation | Jobber’s profits are not determinate; they arise from the dynamics of market forces and pressures of competition. The profits earned by jobbers depend on their buying securities at the lowest prices possible and selling securities at higher prices, depending on the volatility and opportunities prevailing in the market. | Brokerage fees have standardization, and stock exchanges regulate them to maintain fair practice. The earnings of the brokers are relatively more regular because they are dependent upon the volume of transactions and the rates fixed by the exchange. |
Profit Risk | Jobbers carry high market risk as they trade based on their own capital. The immediate impact of fluctuation in market prices will always be realized by the jobbers, either through profit or loss. Their risk management skills is a must as wrong decisions bring instant financial implications. | Market risk is less for brokers as they do not trade on their account. Their biggest concern is client-related risk-loss of clients or loss of their commissions in case they did not make trades efficiently. As long as they continue to maintain and operate effectively on the behalf of their clients, their income is ensured. |
Regulatory Compliance | Jobbers are regulated to ensure market stability and transparency. They must follow certain policies related to capital requirements, market-making, and reporting. These regulations ensure that they have adequate capital to cover against losses, thus supporting market liquidity. | There are more rules to the clients’ advantage that bind the brokers, as they have to adhere to guidelines which aim at protecting the clients’ interests. These include the agent duties, fair treatment, and disclosure of any conflict of interest. Thus, a broker is always obliged to act in the best interest of the clients and provide honest, transparent services. |
Modern Relevance | Electronic trading and automated systems have today replaced the traditional jobber’s role. These electronic platforms allow liquidity and the execution of trades faster and much more efficiently than human jobbers. Nowadays, jobbers are mainly substituted by automated market makers in stock markets. | Brokers continue to play an essential role in the market, especially for retail investors and institutions looking for personalized service. Brokers offer experience, advice, and provide help to navigate through very complex trading environments that cannot be replaced by automation. |