Mortgage Brokers: Friends or Foes?

Mortgage Brokers: Friends or Foes?

The political debate over how to deal with a surge in defaults on home loans is raising a question that consumers ought to consider: Is my mortgage broker really working for me?

Borrowers often see mortgage brokers as their allies, searching far and wide for just the right home loan at an attractively low price. But many brokers are making it clear they don't see things that way. They are fighting efforts by federal and state politicians to impose a fiduciary duty on them to put their customers' interests first, as lawyers, real-estate agents and financial planners generally are required to do with their clients.

"The mortgage broker does not represent the borrower," says Chris Holbert, president of the Colorado Mortgage Lenders Association. "We sell access to money." The industry group recently opposed language in Colorado legislation that would have required mortgage brokers to act "primarily for the benefit of the borrower." That provision was later deleted.

Brokers, most of whom are lightly regulated by state agencies, are involved in originating around 60% of all home loans, according to Wholesale Access, a research firm in Columbia, Md. The industry is under scrutiny in Washington and state capitols because rogue brokers have been accused of contributing to the spike in mortgage defaults and foreclosures by encouraging borrowers to take risky loans and by charging excessive fees.

That doesn't mean consumers should shun all brokers. Many provide good service and can help people sort through the complexities of choosing a loan. Consumers don't necessarily get a better deal by going directly to lenders, which also can charge excessive rates and fees.

To protect yourself, one strategy is to shop for a home loan directly at a few lenders and then see whether a broker can find a better deal. When choosing a broker, borrowers should ask tough questions first. Among them: In searching for loans, do you feel obliged to put my interests ahead of yours? Exactly how much will you earn on this loan? And how many lenders do you check regularly for rates and terms?

Some brokers offer to fix their fees in advance so they won't have any incentive to recommend a loan that would be more lucrative for them. Trade group Upfront Mortgage Brokers Association (www.upfrontmortgagebrokers.org) maintains a list of brokers who set their fees in advance.

Camilo Ramos, a house painter and remodeler in Minneapolis, wishes he had asked a few more questions of his broker before refinancing a home loan last year. Mr. Ramos says he wasn't warned how much his monthly payment on the $300,000 adjustable-rate mortgage could jump after an initial low-payment period. The brokerage firm, Source Lending Corp., Brooklyn Park, Minn., received total compensation of $13,517 from the transaction, says Jeff Skrenes, a member of the Minnesota branch of the Association of Community Organizations for Reform Now, a nonprofit advocacy group, which is trying to help Mr. Ramos refinance into a more suitable loan.

Chris Hacker, owner of Source Lending, says his firm did nothing wrong in this transaction and adds, "We have thousands of satisfied clients."


he National Association of Mortgage Brokers, the main nationwide trade group for brokers, argues that brokers work neither for consumers nor for lenders. Imposing a fiduciary duty would increase the risk of litigation over whether brokers are to blame for loans that go bad, says Joseph Falk, legislative chairman of the association. He adds that the group favors clear disclosures to consumers and no hiding of important details.

For now, most states lack any legal provision spelling out whether brokers have a fiduciary duty. Many brokers sell a relatively small range of products without being obliged to make sure the consumer gets the best terms known to the broker on a suitable loan.

They receive fees -- often totaling between about 1% and 3% of the loan, but occasionally even more -- for finding customers and guiding them through the loan process. These fees come either from borrowers or through payments from lenders known as yield-spread premiums, or YSP, or through a combination of the two.

Often the broker's incentives run counter to the borrower's interests. Lenders pay YSP to the broker when the borrower is paying a higher interest rate than the best he or she could qualify for, which makes the loan more profitable for the lender. The higher the rate, the higher the payment to the broker. (Some lenders put a ceiling on YSP.) Lenders may also pay brokers a bonus for loans with prepayment penalties, which make it expensive for borrowers to refinance within the first few years.

YSP amounts to "a payment for giving the homeowner a worse deal," says Prentiss Cox, an associate professor of law at the University of Minnesota who previously investigated lenders as an official in the state attorney general's office.

In some cases, paying a slightly higher rate and allowing the broker to receive YSP can make sense for cash-strapped borrowers who don't want to pay an immediate fee to the broker. With YSP, the cost of the broker's service is spread over the life of the loan in the form of higher interest.

But Howell Jackson, a professor at Harvard Law School who has analyzed thousands of home loans, says YSP is confusing for consumers and can allow brokers to "extract excessive payments" from unwary borrowers. In some cases, he found, brokers' total compensation, including YSP, came to more than 3.5% of the loan amount.

For consumers, even shopping around can be difficult. With different combinations of fees and terms, it's hard to compare one loan to another. And the exact level of fees may not be apparent until the borrower is at the closing table, when it may be too late to seek a better deal elsewhere.




Borrowers eyes "are glazed over with all the paperwork," says Jeff Lazerson, president of Mortgage Grader Inc., a mortgage broker in Laguna Niguel, Calif., that sets a fixed fee in advance for clients. Their confusion, he says, gives unscrupulous brokers "a license to lie."

In Washington, legislation was introduced this month by Sens. Charles Schumer (D., N.Y.), Sherrod Brown (D., Ohio) and Bob Casey (D., Pa.) that would impose on brokers a fiduciary duty to put their customers' interests first. The proposed legislation is considered a long shot for this year.

In Minnesota, legislation enacted last month specifies that brokers have "an agency relationship" with borrowers, meaning they must act in a borrower's best interest and can't put the broker's interests first.

Colorado legislators recently shied away from imposing such a standard. Instead, the state House and Senate passed bills stating that brokers have only "a duty of good faith and fair dealing."

California is an exception. A 1979 ruling by the state Supreme Court established that mortgage brokers there do have fiduciary duties. Pete Ogilvie, president-elect of the California Association of Mortgage Brokers says that hasn't caused him any problems and clarifies his role.

Top rated online brokers

BEST OF THE BEST

To open the account to start to invest, is only half has put. The most important question – how to choose fund. What branch to buy? To be enclosed in American Mutual funds or to prefer Europe? The answer is simple: it is necessary to buy the best funds (and the best not only on profitableness, but also concerning corresponding indexes, see schedules).

Above already it was said that funds happen the most different and it allows the investor to create well balanced portfolio. You can find the information on funds on numerous financial sites. Here again, certainly, America has again appeared ahead of all. The information on the American funds is on www.smartmoney.com, in sections «finance» large searchers msn.com, yahoo.com, google.com. There you will find the actual statistics on funds, a place of everyone in authoritative ratings, schedules of dynamics of a course of shares, profitableness for the different periods and etc. And here on the European funds the fullest information publishes agency Morningstar – his data uses all investment companies of the world for work (there are sites Morningstar on the separate countries, for example www.morningstar.co.uk (Great Britain), www.morningstar.de (Germany) and etc.

On the specified portals you will choose that is necessary for you. We will tell, attractive the funds investing in securities on which the emitter pays high dividends today seem to me. Fund BlackRock High Yield Bond Inv A concerns their number, for example. Dividendnaja profitableness on him has made 11,85 % annual.

Fund Vanguard REIT Index ETF takes shares of the companies putting in real estate. Investors receive from him and to him similar dividends in 10–25 % annual.

Also it is necessary to pay attention to the funds investing in the action of developing countries. Among these funds the most known and popular are funds BRIC – the funds taking shares of the companies of Brazil, Russia, India, China. If you are excited with rouble devaluation (and she excites me), to get such fund as currency of the given fund is the dollar or euro is better.


Certainly, as well as the Russian PIFS, foreign mutual funds have lost a considerable part of the cost against proceeding crisis. Many funds have fallen to 40–50 % in 2008 (though and not all – some have shown good growth last year). Flight of investors from the share market in highly reliable tools – bonds of the developed countries became the reason. For this reason and also for the reason that in 2008 almost all developed countries have lowered refinancing rates, the state bonds have considerably grown in the price. For example, Rydex Govt Long Bond 1.2x Strategy Inv has grown in 2008 on 37 %. This fund invests only in the state bonds of the USA. Thus for purchase of bonds he sometimes borrows means banks.

It, of course, extremely high profitableness for fund of bonds. This year he «has left in a minus» on 11 %, and the potential of growth at him practically is absent, because the refinancing rate is at a minimum level.

Other fund, Templeton Global Bond A Acc €, has grown for the last half a year on 17 % that also it is a lot of for fund of bonds. This fund less, than previous, and more attractive to investors.

Option of the emitter

Option of the emitter

Option of the emitter — the issue security fixing the paid right of its owner on purchase in term provided in it and-or at approach of circumstances specified in it of certain quantity of actions of the emitter of such option at the price, defined in an option of the emitter. The option of the emitter is a nominal security.


Decision-making on seating of options of the emitter and their seating are carried out according to the established federal laws rules of seating of the securities converted in the action. Thus the price of seating of actions to execute requirements on options of the emitter is defined according to the price defined in such option.



Now the option of the emitter exists in Russia only in regulatory legal acts. Any release of options of the emitter it was not carried out.

The emitter hasn't the right to place an option of the emitter if the quantity of the declared actions of the emitter is less than quantity of actions, the right to which acquisition is represented by such options. Seating of an option of the emitter probably only after full payment of an authorized capital stock of joint-stock company.
The savings certificate — a security certifying the sum of the contribution, brought in bank the physical person, and the rights of the investor (the holder of the certificate) to reception after a target date of the sum of the contribution and the percent caused in the certificate in the bank which has given out the certificate, or in any branch of bank.

Mortgages services list

Mortgages

In the developed countries credit brokers are high-grade components of the financial market. Traditionally, banks and other credit institutions realize the products independently. However, as the real estate market becomes more competitive, the role of the credit broker becomes more and more popular. For today in the most developed financial markets (especially in the USA, Great Britain, Australia, New Zealand, Spain and Canada) credit brokers are the greatest distributors of bank products for borrowers.

In the post-Soviet territory countries the given kind of activity has appeared more recently. Now, besides traditional credits, there is a considerable quantity of derivative credit products — letters of credit, demand lines of credit, , bills, credit cards — about which majority of borrowers have not full idea, and, hence, need the help of advisers.
The credit broker — the participant of the financial market who mediates between banks and borrowers in the course of realization of operations of crediting physical and legal bodies.

In the course of work credit brokers cooperate with many financial structures and the companies: banks, the insurance, estimated companies, real estate agencies, showrooms, etc.

Into a complex of the services given by credit brokers enters: selection of the optimum scheme of the crediting, full support of projects of clients, negotiations with creditors.

On the basis of individual arrangements with banks and financial structures, brokers can offer the clients the most favourable conditions on rates below the bank. The profit of brokers is formed at the expense of percent from business deals.

The list of services by the credit broker:

* the analysis of documents;
* an estimation of solvency of the borrower;
* selection of the optimum credit program according to inquiries of the borrower;
* detailed calculation of all accompanying expenses;
* the comparative analysis of schemes of repayment of the credit;
* an explanation of features of crediting in banks;
* recommendations about increase of the status of the borrower;
* formation of a full package of documents for giving in bank;
* the preliminary coordination about possibility of crediting of the borrower;
* application in bank;
* support of consideration of documents of the borrower in bank;
* reduction of term of consideration of the demand;
* drop of risk of refusal on credit reception.

Unfair Brokers

There is big enough category of the persons, wishing to obtain in bank the consumer or automobile credit, without possessing thus ought payment - and credit status. Credit falsification occurs when one or more physical persons deceive financial institution, purposely representing false information . Some credit brokers, bankers, etc. can be involved in illegal crediting.

Most often meeting types of a deceit of the broker are more low listed:


* falsification of the inquiry on incomes, certificates on the property right to actives and other documents;
* an incomplete explanation to the borrower of credit conditions and a policy of bank;
* belief of the borrower refinance* the credit without obvious benefit;
* concealment of percentage compensation or other payments, before signing of the agreement with the borrower;
* influence on the appraiser for the purpose of increase of an estimation of property;
* use in the purposes of absence of experience of the borrower in crediting questions.

Ladder creation

"ladder creation" — an investment mode at which the investor buys some financial tools with various term of repayment. See also лэддеринг in marketing.

The maintenance

* 1 Benefit
* 2 Other use
* 3 Notes
* 4 See also

To Benefit

it is not subject to risk to the most part of actives at an adverse financial environment. For example, the person has the depositary bonds which term of repayment comes in 2015 and 2018 If the interest rate is strongly enough depressed under bonds of 2015 half of income is closed till 2018

If necessary laddering can liberate the capital. The person can get more short-term bonds if means in the near future are necessary for financing for it, for example, training of children or to buy more long-term bonds, term which repayments, will come much later and urgent expenses, in a situation when the economy favors to reception of incomes won't be necessary.

Other use

also describes process where for share acquisition at determined price, investors should also agree to buy additional shares at higher price. It is artificial inflates the price of a share capital and allows the devoted persons to buy at lower price with a guarantee of that they can sell at higher price. Such practice is illegal.

Fund traded at a stock exchange

Fund traded at a stock exchange (English Exchange Traded Fund, ETF) — the index fund, which shares address at a stock exchange. Structure ETF repeats structure of the chosen base index. Unlike an index PIF, with actions ETF it is possible to make all same operations which are accessible to ordinary actions in exchange trade.

In it advantage ETF before the PIF — operations under actions ETF can be made within all trading day and their price changes depending on activity of dealers. Actually ETF is the new kind of securities which are carrying out a role of the certificate on a portfolio of actions.

This fund is very similar to usual Share investment fund (PIF) and bears in itself all advantages which the PIF has:

* Professional steering:
* Low initial investments:
* High liquidity:
* the Wide diversification:

Difference ETF from PIFS:

* the Price of the share of the PIF is formed not at a stock exchange, and pays off in the end of day on the basis of cost of a net wealth of fund. The price акциий ETF changes during the day.:
* Shares of PIFS can't be borrowed or bought on the means borrowed. With actions ETF trade that allows to use a credit shoulder and "speculation for the fall" is admissible маржинальная, but does such operations by more risky.:
* Usually shares of PIFS address in the country of its establishment. Actions ETF can bargain at foreign stock exchanges.:

Funds traded at a stock exchange as the exchange tool, were widely adopted in the West. In Russia the corresponding legislation while isn't present

Actions "International bureau of credit stories" will be bought by Icelanders

Actions "International bureau of credit stories" will be bought by Icelanders

The antimonopoly committee of Ukraine (АМКУ) has authorized the holding company "Creditinfo Group hf." (Reykjavic, Iceland) on purchase of actions ПАО "the International bureau of credit stories" (МБКИ, Kiev).

As have informed ЛІГА.Финансы in АМКУ, acquisition provides excess of 25 % of voices in the supreme body of steering of the emitter.

Bureau of credit stories - the commercial organization which is created for the purpose of accumulation of the information on borrowers - physical and legal bodies, their present and last obligations

The history of the bill

The bill is one of the oldest financial tools. Among bill prototypes it is necessary to note синграфы and хирографы, arisen in ancient Greece and borrowed in Roman empire. In V ІІІ century in China have arisen securities similar to the bill фейцянь, and during time of a dynasty of Sun – used for safe remittance on the big distances.

Among the Arabian prototypes of the bill it is possible to name debt documents, possibly, affected occurrence in Italy in Х ІІІ–ХІV century of the first forms of the bill [1]. As the bill has appeared in Italy in XIII century, the majority of the terms connected with bills (an endorsement, аваль), have the Italian origin. From the initial debenture the bill has got popularity at carrying out of operations on a currency exchange. Changed, having received money resources, gave out the debenture payment on which could be received in other place. Thanks to the flexibility and convenience the bill has quickly extended across Europe. The increase in volumes of bill operations has demanded legislative fastening of the developed customs of a business turn, and in 1569 in Bologna the first bill charter has been accepted.

Originally to the holder it was forbidden to transfer the rights to other persons. However already to the XVII-th century beginning, the given restrictions became a deterrent in trade and they have been gradually cancelled. The bill rights have started to transfer by means of putting down of the special order of the holder — an endorsement (from ital. in dosso — a back, a ridge, the back — as the given inscription was made, as a rule, on the back bills).

Financial Soviet Reality

In Russia the bill has appeared in the XVIII-th century beginning thanks to development of trade relations with the German princedoms. Therefore Russian word "bill" occurs from it. Wechsel - an exchange, transition. On the basis of the German bill legislation the first Russian Bill charter of 1729 has been written. However direct loan of foreign norms didn't meet the requirements of the Russian validity. For example, most in details the charter regulated the bill relations connected with transfer of money resources (the draft form) while in Russia the greatest distribution was received by practice of use of bills for registration of loans (the promissory note form).

In 1832 the new Russian Charter about bills has been accepted. In this case norms of the French right, namely the French trading code have been put in a document basis. At the same time, the charter contained the separate positions borrowed from the German bill right. The basic attention was still given to translation operations. The promissory note was mentioned to apply only to it (or to exclude) action of norms about the draft. In connection with the general oriental the Russian legislation on norms of the German right, Charter use about bills involved certain inconveniences, and practically right after its acceptance works on its perfection and change have begun.
In a basis of the new charter it has been decided to put the unified norms of the bill legislation of the leading states of that time. Within 55 years it has been prepared six editions of the bill. In parallel the changes were made to the Charter about bills, called to eliminate the most odious valid provisions. So, the opinion of the State council which has extended the right to be obliged by bills for all estates, except for persons of a ministry, the bottom military ranks, the peasants who not having the immovable property and haven't taken trading certificates, and also women without the permission of parents or husbands on December, 3rd, 1862 has been confirmed.

The new bill charter has been confirmed on May, 27th, 1902. It defined the bill as «obligation of the drawer absolutely independent of the previous agreements about доставлении to the first purchaser or last holder in known term of the known sum of money». The charter consisted of 126 articles, first two articles represented the Introduction, the devoted classifications of bills. Other parts have been grouped in two sections, the first has been devoted the promissory notes, the second — to drafts. Each of sections contained on five heads: chapter 1 defined an order of drawing up and the reference of bills; the second — responsibility of the payer; the third — procedure of fulfillment of the protest under bills; the fourth — terms for a presentation of bill claims; the fifth — the norms which have not entered for whatever reasons in first four heads.

The Russian bill charter of 1902 has existed before October revolution of 1917. The decree of Council of National Commissioners from November, 11th, 1917 had been declared the two-month moratorium on realization of bill payments, and also bill protests. Further the reference of bills for territories of RSFSR has been substantially reduced. Only at transition to new economic policy in 1922 Position about bills was accepted, according to which cooperative societies and banks were authorized to give out and accept to the account (repayment) of the bill, and also to use them for registration of credit operations.
In 1928 during financial reform carrying out of credit and bill operations that has caused liquidation of the bill reference in the country was forbidden to consumer societies and their unions. However the bill continued to be used in foreign trade activities. Development of commercial relations has led to that in 1936 of the USSR has joined the International convention on the bills, including the Uniform law about translation and the promissory note. The decision of the Central Executive Committee and Council of National Commissioners of the USSR from August, 7th, 1937 № 104/1341 had been installed «Position about translation and the promissory note» which almost completely reproduced the text of the Uniform law about simple and the draft. Despite it, in internal economic operations the bill still wasn't applied, as financing of economic activities of economic subjects was carried out at the expense of the centralized distribution of monetary resources.


Again in territory of Russia the bill has been entered into the reference by the Decision of Presidium VS of RSFSR from June, 24th, 1991. № 1451-I «About bill application in economic circulation of RSFSR» which though didn't contain mentions of the Decision of the Central Electoral Committee and СНК the USSR of 1937, reproduced it with insignificant differences. In the subsequent the given document has been excellent the Federal law from March, 11th, 1997 № 48-FZ «About translation and the promissory note» which has established that according to the international obligations of the Russian Federation escaping from its participation in the Convention from June, 7th, 1930, the Decision of the Central Electoral Committee and СНК the USSR «About introduction in Position action about translation and the promissory note» from 8/7/1937 № 104/1341 is applied. Also the given Federal law has eliminated a number of the points at issue, concerning release of bills and charge of percent and a fine, and also has limited a circle of persons which can be obliged on simple and to drafts, having excluded from it subjects of the Russian Federation, city, rural settlements and other municipal unions. Now in territory of the Russian Federation the given law is basic at regulation of bill relations.

American Depositary Receipt

Depositary Receipt the document certifying that securities are placed on storage in bank-kastodiane (custody) in the country of the emitter of actions addressed to bank-depositary, and granting the right to its owner to use benefits from these securities. Except for a difference because of a course change of currency the price for these receipts changes point in point with change of the price for base securities, except those cases when in the local market participation of foreign investors is limited.

The most known kinds depositary receipts — American depositary receipts (ADR — American Depositary Receipt) and global dep* receipts (GDR — Global Depositary Receipt). ADR are issued for the reference in the markets of the USA (though address and on European), GDR — for the reference in the European markets.

In 2007 in the Russian legislation there was a concept «Russian depositary the receipt» (RDR). According to FE «About a securities market» RDR is the nominal issue security which does not have a face-value, certifying the property right to certain quantity of actions or bonds of the foreign emitter and fixing the right of its owner to demand from emitter RDR of reception in exchange RDR corresponding quantity of represented securities and rendering of the services connected with realization by owner RDR of the rights, fixed by represented securities. According to information letter FSFR it is necessary to conduct the isolated account dep. receipts by principles dep. account

Global depositary receipts take place outside of the company-emitter country in the markets of two and more countries.

American Depositary Receipt

ADR — derivative security freely addressing in the American stock market on the actions of the foreign company deposited in the American bank-depositary . 95 % of releases АDR are necessary on a share of three banks — Bank of New York, Citibank, J. P. Morgan Chase . АДР are nominated in US dollars and address both at the American stock exchanges, and in the American off-exchange trading systems.

Prior to the beginning of release АDR the company-emitter should define, what exactly she wants from it to receive and that it is ready to make for this purpose. In this connection there are some various kinds of programs from which the company can choose the approaching.

Not sponsored receipts

Not sponsored ADR exhaust for sale in markets OCM (over-the-counter market). At not sponsored program ADR between dep. bank and the foreign company there is no official agreement. The companies which actions are issued under this program, have the right not to declare the financial information under the American standards. The prices of such receipts are rather low because of low liquidity and a high risk.

АDR

The first level АDR is low level of sponsored receipts. Also it is the idle time for the company a mode to receive АDR. In this case level of the reporting of the company is not obliged to correspond to standards GAAP, and the reporting under standards SEC should be minimum. From the company it is not required the quarterly or annual reports prepared according to standards GAAP. АDR I is initial level АDР. Greatest quantity АДR — АDR the first level. After reception АDR I company can raise level of the receipt to the second and the third.However access on large exchange markets ADR of the given level is limited. АDR 1 address in markets OTS, but can't address at the New York stock exchange (NYSE), the American stock exchange (АМЕХ) and NASDAQ.

АDR II

If the company wants to get access to such large stock exchanges as NYSE, АМЕХ and NASDAQ it is necessary for it to obtain the permit on АDR the second level. For this purpose it is necessary for it to pass full registration in SEC. Besides from the company annual reports under form Form 20-F at which filling the company should follow standards GAAP are required.

АDR III

АDR the third level it is used for possibility of attraction of the new capital. Emitters ADR of the third level should register both dep. receipts, and initial shares of company in SEC and to fill Form F-1, 20-F, to correspond to standards GAAP. Release ADR of the third level is actually equivalent to the public offer of actions at a stock exchange and demands the same level of disclosing of the financial information. Also the emitter should correspond to listing requirements at that stock exchange where trade ADR will be carried out.

The limited programs

The companies which don't want to exhaust the action on the open market and to sell to their concrete foreign investors (which, as a rule, large private investment funds are) can use following programs.

144 (a)

Private seating АDR of category Rule 144А. According to rule SEC Rule 144A, the companies can involve the capital in the USA by means of private seating sponsored АDR among the qualified institutional investors (the institutes which capital makes not less than 100 million US dollar). Registration in АДР In this case isn't required. The company shouldn't give the financial reporting.

Regulation S

One more mode to limit trade in receipts is to place private АDR categories Regulation S. The American investors can't hold or trade in receipts of this category. Receipts are registered and issued among not American residents and aren't registered the regulating organizations of the USA.

АDR categories Regulation S can be transformed in АDR I after the restriction period will end.

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— activity on consultation of manufacturers, sellers, buyers on a wide range of questions in sphere of technological, technical, expert activity. The consulting purpose — to help management with achievement of the declared purposes . The consulting companies specialize on separate lines of activity (for example, financial, organizational, strategic)

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Our Partners

Broker— legal or the physical person who is carrying out mediatorial functions between the seller and the buyer, between the insurer and the insured (the insurance broker), between the ship-owner and others. The broker obtains reward in the form of commission fee.

Broker on a securities market — the sales representative, the legal body, the professional participant of the securities market, having the right to make operations with securities on the instructions of the client and at his expense.


The professional participant
of a securities market who are carrying out broker activity, is called as the broker. Broker activity activity on fulfillment of civil-law transactions with securities and (or) on the conclusion of the contracts which are derivative financial tools, on the instructions of the client from a name and at the expense of the client (including the emitter of issue securities admits at their seating) or on its own behalf and at the expense of the client on the base contracts with the client.

The representing broker
— independent physical or the legal body who accepts demands from clients on the conclusion of transactions on the stock exchange, but itself doesn't conduct their account and doesn't accept money or values on account of the deposit or a margin.

Broker activity is a licensed kind of activity. In the Russian Federation the license for realization of broker activity stands out Federal Agency of the financial markets (till 2004 — the Federal commission on a securities market).