It typically refers to a room where tele-marketers work, often selling stocks, and using unfair, dishonest sales tactics, sometimes selling fraudulent stocks.The term carries a negative connotation, and is often used to imply high-pressure sales tactics and sometimes, poor working conditions.
A stockbroker may or may not be also an investment advisor, and vice versa.
Transactions by stockbrokers in the US and UK In the US: When acting as an agent, the stockbroker typically charges the client a flat fee and/or a percentage-based commission for undertaking the trade, and the price quoted the client must be the best price available in the market.
When acting as a principal, the trade could be with another market participant or one of the stockbroker's clients.
The boiler room usually holds a large position in the stock and plans to dump it on brokerage clients at a high price.
The boiler room usually has close ties to or the same owners of the company whose stock is being promoted.
When trading in a principal capacity with a client, the broker informs the client and charges the client a markup or markdown from the prevailing market price.
You must have an account to comment. Please register or login here!