Do i have to find a broker/online broker to buy stocks?

Is it literally impossible to buy stocks without a broker/online broker or is that just suggested? Please answer with a fact, not an opinion!

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  • 8 years ago
    Favorite Answer

    Generally however there are "4 markets" for selling and buying shares. You can potentially trade in any of them:

    1: Primary Market - New share issuances where you can buy shares directly from the company issuing them. i.e. buy Facebook shares from facebook rather from other Facebook shareholders (not that anyone would buy facebook today). If the company is open-ended (rare except for Listed Investment Companies) you can sell your shares to the company and the company cancels them. You do not need a broker but you are reliant on the company to make a market.

    2. Secondary Market - This is on-market trading which is what most people think of as "trading shares". Here you need a licensed broker or you need to be your own broker. To be your own broker you need licensing and you need to purchase trading rights / market access / a seat on the exchanges you want to trade. ie it is completely impractical to trade on the secondary market without a broker. Since the other markets are not practical to trade in, then as a matter of practicality yes you do need a broker to buy stocks.

    3. Third market - this is where you trade with a broker. Technically, the definition of the third market is trade between a market participant (eg broker) and a non-market participant. i.e. The broker in the trade does not represent you, you just sell to or buy from the you broker as a principal. In this trade you would be the non-market participant. However normally this only works if you are an institution - i.e. trading $10m or so.

    4. Fourth market - Retail shareholders can trade on the 4th market by filling out off-market transfer forms. The forms are lodged with the market regulator and the share register is updated accordingly. This is the only practical way you can trade shares without a broker as a retail investor. The process varies by jurisdiction. You also need to know who you are buying and/or selling to before you can trade. This information is a practical limit on how useful the 4th market is.

    EDIT: Interesting to see how the answers have evolved. Most are quite pedestrian, done by people who have not shown an ounce of understanding about how markets work in detail and/or in multiple countries.

    You asked whether it is literally impossible to buy stocks without a broker. The answer is emphatically NO. You do not need a broker to buy a stock. I know this because I have done this before several times. Seller and buyer contact each other privately. The seller fills out an OMT Form - see link attached. Put form in envelope; add stamp, address to ASIC put in mailbox. Buyer pays seller. Trade done. No broker. Sure there are many practical limits to this, but you asked "literally possible" not "practical"

    In the USA there is an almost identical system. Except instead of lodging directly with the SEC you lodge with transfer agents (who are NOT necessarily brokers) hence yes you CAN trade without a broker. See the links to the SEC website explaining how you can do this.

    In the UK it is called a NON MARKET TRANSFER. Again a link to a description of how you can trade shares in the UK without a broker is provided (UK Computershare).

  • 8 years ago

    Where else would you get them - eBay, Craig's list, the stock market store??

    As far as I know, there's only 3 ways to buy stocks -

    1) a dividend re-investment plan

    2) a broker

    3) a brokerage account (the easiest & traditional way)

  • Raysor
    Lv 7
    8 years ago

    Yes, you do.

    People often say you can do this & that without a broker but the correct answer is yes.

    Imagine what would happen if people could trade stocks 'outside the system'. It would be chaos!

  • Steven
    Lv 4
    3 years ago

    1

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  • 8 years ago

    If it is a publicly traded stock, yes, you need a licensed broker to place the trade.

  • Anonymous
    8 years ago

    Plus500 is regulated reputable broker with long history. You can get free bonus, it is enough to start trading.

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