Stockbrokers represent an extremely important and heterogeneous group of participants in the financial market. Although there are several types in the world, in Serbia they can be roughly classified into two basic categories, with the form of organization of a legal entity being taken as a criterion for division. So we distinguish between broker-dealer companies and authorized banks. While broker-dealer companies are organized as a separate legal entity, authorized banks obtain the status of a stockbroker by forming a special organizational unit within the bank. In addition to the very existence of a separate organizational part, it must be separately recorded in the business books, as well as be technically and personnel equipped to perform basic activities.
Broker-dealer companies can perform different forms of business depending on the category in which they are registered. Thus, according to the Law on Securities Market and Other Financial Instruments, it is possible to establish a broker-dealer company that will cover the affairs of brokers, dealers, market makers, portfolio managers, issue agents, issue sponsors and investment advisors. The main difference between brokers and dealers lies in the fact that brokers buy and sell securities in their own name and on behalf of the client, while dealers trade in their own name and for their own account. The broker charges a commission for his services, while the dealer earns a difference in the price of the paper. The job of a market maker is a specific type of dealer, considering that he has the obligation to buy or sell securities at the price he has publicly stated in advance. The market maker, in addition to his own interest, keeps the interest of the entire market, because sometimes, even to his own detriment, he buys or sells securities in order to maintain their liquidity and prevent more drastic price fluctuations. According to the mentioned Law, the minimum share capital of a broker-dealer company is prescribed. In order for a broker-dealer company to perform brokerage activities and the activities of an investment advisor, it must have a minimum of 50,000 euros of share capital, while for the performance of dealer operations and the activities of an issue agent, that amount is twice as high. If, on the other hand, the company wants a job as a market maker of the Belgrade Stock Exchange or a portfolio advisor, the minimum capital is 200,000 euros. Maximum amount of 300. 000 euros is needed if the company wants to deal with the affairs of the sponsor of the issue of securities. Also, according to the Law, a broker-dealer company may perform the activities of a broker if it has at least one person employed for an indefinite period of time, with a license to perform the activities of a broker. This license is issued by the Securities Commission after the person has attended a brokerage course and passed the appropriate exam.
Given the risk to which the broker-dealer company is exposed in its operations, the Law stipulates that the company’s capital must always correspond to the amount of capital required to cover possible losses. The amount of this capital, as well as the methodology for its calculation, was prescribed by the Securities and Exchange Commission. Also, in order to reduce the business risk, it is prescribed that the risk exposure, ie the sum of all receivables from a person, the value of investments in securities of that person, as well as the value of the share of the broker-dealer company in that person must not exceed 25%. These regulations were created with the aim of minimizing the risk and thus reducing the danger that investors and other participants in the financial market will be drastically damaged if the broker-dealer company experiences a business death.
In Serbia, 74 broker-dealer companies are currently registered with the Securities and Exchange Commission, while another 20 authorized banks are registered, which also perform broker-dealer operations on the Belgrade Stock Exchange. Out of a total of 94, 88 of them have the status of a member of the Belgrade Stock Exchange and as such they can perform the trading process itself.