Legal Definitions - commission broker

A commission broker is a type of broker who is a member of a stock or commodity exchange and executes buy and sell orders for clients. They earn a commission on each transaction they make on behalf of their clients.

For example, if a client wants to buy 100 shares of a particular stock, they would contact their commission broker who would execute the order on the stock exchange. The commission broker would earn a commission on the transaction based on the agreed-upon rate.

Another example would be a client who wants to sell a certain amount of wheat futures. They would contact their commission broker who would execute the order on the commodity exchange and earn a commission on the transaction.

Commission brokers are different from other types of brokers, such as discount brokers or full-service brokers, because they only earn a commission on each transaction and do not provide additional services such as investment advice or research.