CFA Investment Practice Exam

The primary role of a broker in financial markets is to facilitate transactions between buyers and sellers. Brokers act as intermediaries, connecting individuals or institutions looking to buy or sell securities. They help streamline the trading process by providing access to the market and executing orders on behalf of their clients. This function is crucial in maintaining market liquidity and efficiency, as it allows buyers and sellers to find each other more easily, negotiate prices, and complete transactions without difficulty.

In contrast, trading for their own accounts involves a different role typically associated with dealers or proprietary traders, who take positions in securities intending to profit from price changes. Providing services for settling trades is a function often managed by clearinghouses or custodians, which ensure that transactions are completed and recorded accurately. Managing investment portfolios pertains to investment advisors or portfolio managers, who construct and oversee a collection of assets on behalf of clients, a role distinct from that of brokers whose primary duty is to facilitate market transactions.