How do retail brokers work?

T

TraderManiac

Can someone explain to me how retail brokers work. So they provide the software you can use to trade. That is obvious, but what do they do behind the scenes.

Okay, so let’s say that I route my trade, and it is executed. How does it execute? And how are the shares transferred from the buyer to the seller?
 
Quote from TraderManiac:

Can someone explain to me how retail brokers work. So they provide the software you can use to trade. That is obvious, but what do they do behind the scenes.

Okay, so let’s say that I route my trade, and it is executed. How does it execute? And how are the shares transferred from the buyer to the seller?
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Brokers transfer share ownership and cash during the settlement process. There's a 2-day settlement window during which, assuming you're the buyer, your broker takes receipt of the shares from the seller's broker and sends payment back. It's all done electronically, of course. No physical shares are exchanged any more.
 
Mistake: should have been "transferred from the seller to the buyer"

Thanks for the future reference biologymajor, but routing is not what I’m referring to. Here are good article on ECN’s and exchanges:
http://www.investopedia.com/articles/basics/04/092404.asp
http://64.233.167.104/search?q=cach....html+what+is+an+ecn&hl=en&gl=ca&ct=clnk&cd=5

HA! HA! Thanks Rhody Trader. That was what I was looking for. So is it fair to say what we see in our account is virtual? That in the background they own a “bank” of stocks? If so, who trades/settles this bank of stocks? Can they make or lose money through the settlement process?
 
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