Stock jobbers are not stock brokers; they have different roles to perform. They are the special agents who mainly handle the wholesale trade of securities among brokers. Stock brokers are considered a key factor in providing liquidity to the security market as they work as market marketers. Learn more about stock jobbers by reading this article. We have covered each point you need to know about stock jobbers in the stock market.
Who is Jobber in Stock Market?
The stockjobber is a dealer who buys and sells the stocks on their behalf. They match the buyers and sellers without owning any shares they are dealing with. Jobbers in the stock market in India play a crucial role in wholesale trading, as they take a risk by exposing themselves to changes in terms of share prices. In addition, some jobbers in the stock market may make the market by quoting firm prices to sell and buy the selected shares. In contrast, others act like dealers to quote the buying and selling price.
Things to Know about Stock Jobber
- Stock Jobbers is also called market maker in the Indian and worldwide stock exchange.
- Jobbers keep a certain number of stocks in their accounts and facilitate liquidity processes by matching buy and sell orders.
- Earlier jobbers were not as popular as stock brokers as they do not hold any records.
- However, jobbers used to have records that were not obtained by journalists or observers.
- The jobbers achieved their importance in the stock market because a large number of equities grew during the nineteenth century.
How Does Stock Jobber Work?
Stock jobbers are the least regulated party in the stock market and facilitate the trading activities among buyers and sellers of respective shares.
They can be an essential part of small to large trading deals as they are responsible for providing liquidity through buying and selling stocks.
They play an important role when there are less sellers but a high number of buyers or vice versa. They also affect stock market trends by deciding the buying and selling price of stocks.
Stock jobbers of market makers often use many signs and symbols that the investor must understand to make informed buying and selling decisions about stocks. If any confusion and trade happens, it may cause a loss.
Jobber in Stock Market Example
Suppose you wish to purchase 1000 shares of ABC Ltd listed in BSE and NSE. To facilitate this trading activity, your broker doesn’t need to look for someone willing to sell the same number of shares in the open market. Instead, they can contact a jobber associated with ABC stock inventory and buy the required shares. If you need to sell 100 shares of ABC Ltd, still your stock broker may contact the jobber. Jobbers mostly set two price brackets, such as the amount they would pay to acquire the shares and the price they would be willing to pay to sell the shares.
Types of Jobbers in the Stock Market
There are mainly three types of jobbers in the stock market, such as:
In this type of stock, jobbers buy the market securities at a low price and hope to increase the prices of purchased stock and then sell these for profit. This trading activity leads to an upward trend in the market and is defined as optimism in the economy. As a result, the stock price gets high, and the market is bullish.
These stock jobbers sell the shares when they believe the stock prices will decrease to make a profit. This stock market phase is called bearishly, and the economy struggles to survive due to less inflow among investors.
These jobbers in the stock market work in the primary market and purchase fresh securities launched in the market for trading. They think such securities are undervalued, and they will make more profit in the future by subscribing to a high number of securities.
Difference between Stock Jobber and Broker
|Stock Jobber (Market Maker)||Stock Broker (Broker)|
|Stock jobber executes buying and selling of shares wholesale.||They facilitate trades in retail mode only.|
|They are not involved in the direct selling and buying of stocks.||They are involved and authorized to perform trading activities in the stock market on behalf of their investors or customers.|
|Market makers do not handle any retail customers.||Stock brokers handle retail customers and charge a certain percentage of commission.|
|They perform trading through their own account and name.||They are intermediaries between the customer and the stockjobber or share market.|
|They make a profit by executing their trading activities.||Most stock brokers earn commission through the trading activity they perform on behalf of their customers.|
|Jobbers are the special mercantile agent and the least regulated party in the stock market.||They are the normal mercantile agents performing in the securities market for trading purposes.|
|Most jobbers are mostly involved in the secondary trading of securities.||Most stock brokers mainly deal in the primary market to generate their revenue.|
Does Stock Jobber Affect Stock Prices in the Stock Market?
Yes, stock jobbers used to affect the prices of stocks to maintain liquidity in the stock market. They were also responsible for leading bullish and bearish market conditions.
Do Stock Jobbers Exist in the Stock Market?
Before digitization stock jobbers used to exist in the stock market. However, now their job is completely replaced by online stock brokerage platforms. And investors can easily sell or buy the desired number of stocks at their comfort.
How to Become a Stock Jobber or Market Maker?
Stock jobbers do not exist in the market. The trading pattern has completely changed and has become very easy, even for beginner investors. So, if you are willing to be a jobber in the stock market, you can become one.
After the digitization of stock market activities, the jobbers in the stock market disappeared. They used to balance the buying and selling of stocks and maintain proper liquidity. However, after digitization, many stock brokerage platforms were established, making stock trading a convenient and less time-consuming process. Currently, stock jobbers do not exist as their job is replaced by stock broker apps and platforms that allow investors to buy or sell their stocks in the open market.