A broker is defined as a person or entity that arranges contracts and acts as an intermediary between a buyer and seller for a commission. A broker is an independent party to a transaction and should not be confused with an agent who acts on behalf of a principal party in a deal. There are many types of brokers, and they appear in several different industries. For example, broker-dealer for trading securities, customs broker, real estate broker, insurance broker, mortgage broker etc.
Additionally, brokers in many fields are regulated and licensed by each state and have a fiduciary duty to act in the best interests of their customers or clients. Brokerage firms are also generally subject to regulations based on the type of brokerage and jurisdiction.
[Last updated in June of 2022 by the Wex Definitions Team]