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What is a Contra Broker?
Malcolm Tatum
Malcolm Tatum
Contra brokers are brokers who are associated with the opposite end of any type of investment transaction. Essentially, the contra broker is the mirror image of the broker who is initiating a transaction on behalf of a given investor. The contra broker handles any actions required to work with the initiating broker in order to successfully complete the order issued by an investor.
The contra broker should not be seen as an outside or opposing force within the process of executing investment orders. Actually, a contra broker is the opposite of any type of obstacle or delay in executing an order. When the contra broker is on the sell end of a buy order, he or she will do everything within his or her power to ensure that the purchase goes smoothly, and without any unnecessary delays. At the same time, when the contra broker is on the buy side of a sell order, he or she has an obligation to also perform all tasks connected to the transaction with efficiency and professionalism.
There is no special skill or credentials that are necessary to be a contra broker. Just about every broker at one time or another will serve in this capacity. This may be due to assisting a corporate client with a contra account, such as accumulated amortization. Other types of contra accounts may also be involved. At the same time, a contra broker may simply be a broker attached to a brokerage house that is processing an inbound order.
In most cases, it is in the best interest of the contra broker, as well as his or her client, to make sure that transactions go smoothly. At the same time, the contra broker will always choose to do whatever is to the advantage of his or her client, just as the broker originating the transaction will also seek to do the best job possible for an investor. In order to accomplish this, the typical contra broker will be well informed about the marketplace, be fully proficient with current applicable laws and regulations, and always be prepared to engage in research that impacts the nature of the transaction.
Malcolm Tatum
After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including WiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.
Learn more...
Malcolm Tatum
After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including WiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.
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Discussion Comments
@anamur-- Real estate brokers are contra brokers and they are supposed to work in the same way, which is, being an intermediary between the needs of the seller and buyer. I'm sure realty brokers work differently in different countries. In the U.S., they are expected to get the highest price possible for the seller, depending on how the realty sector is doing at that time. I haven't heard in the U.S. of practices like the one you mentioned. I'm sure such practices would be against the agreement signed between the seller and the broker. Plus, the seller agrees to pay the broker a commission before the deal is made anyway. Does anyone else have input about real estate brokers in the U.S.?
Are realestate brokers supposed to work in the same way as contra brokers? I reside in Turkey and here, real estate brokers, in addition to making sure that buying and selling processes go through smoothly, also look out for their own benefits. In fact, they often tell the seller that they will be receiving a lesser amount then what they have actually sold for so that they can take the difference as commission. Is this how it works elsewhere like Europe and the U.S.?
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