Floor Broker

A floor broker is a person who works physically on the trading floor of an exchange and executes buy and sell orders on behalf of other people, usually clients of a brokerage firm or the firm itself. Instead of a client entering an order through a computer screen, the order is routed to this person, who then represents it in the crowd of traders at the exchange and negotiates the trade face to face or through the exchange's open-outcry or hybrid systems.

Historically this was the dominant way exchanges like the New York Stock Exchange and various futures and options exchanges worked: brokers stood in a designated area (a "pit" or "post"), shouted or signaled bids and offers, and matched buyers with sellers manually. The floor broker's job was to get the best possible price and fastest fill for the order they were carrying, while also following exchange rules about priority and how orders should be handled.

The nuance that trips people up is thinking this role is extinct or purely ceremonial. Most trading today, including at exchanges that still have a physical floor, is done electronically through computer matching engines, so the volume actually handled by floor brokers is a small fraction of what it once was. But some exchanges retain floor brokers for specific purposes, such as handling large or complex orders, opening and closing auctions, or in options and futures markets where a human can add judgment that a pure algorithm might not. A floor broker is distinct from a floor trader (sometimes called a "local"), who trades for their own account rather than executing orders for others, and from a broker-dealer, which is the firm itself.

Because the mechanics, presence, and role of floor brokers vary by exchange and have changed significantly over time, exactly what they do and how much of the market they still touch depends on the specific exchange and product being discussed.