Firms and individuals who are often collectively called commodity brokers include: Floor Broker/Trader: an individual who trades commodity contracts on the floor of a commodities exchange. When executing trades on behalf of a client in exchange for a commission he is acting in the role of a broker.
Can a commodity broker trade on a specific exchange?
These types of brokers are not restricted to trade on singular or specific commodity exchanges. They can also trade on related exchanges such as the New York Mercantile Exchange and the US’ Chicago Board of Trade. Towards the end of the past decade, investment banks were highly prominent in commodity trading.
Do commodity brokers charge a fee or commission?
However, brokers offer this for a preset fee or commission. They are registered with regulatory authorities of their respective countries for example in the UK the Financial Conduct Authority oversees commodity brokers.
What is a commodities exchange?
A commodities exchange refers both to a physical location where the trading of commodities takes place and to legal entities that have been formed in order to enforce the rules for the trading of standardized commodity contracts and related investment products. Some commodities exchanges have merged or gone out of business in recent years.
