Final answer:
A floor broker represents clients' buy and sell orders on the trading floor of exchanges like the NYSE, which uses the open outcry system. The SEC regulates these exchanges to prevent market crashes.
Step-by-step explanation:
A floor broker is an individual who is present on the trading floor of a stock exchange, such as the New York Stock Exchange (NYSE), rather than the NASDAQ, which primarily uses electronic trading. Floor brokers carry out transactions on behalf of their clients, trying to get the best execution and price for the orders they have been entrusted with. The NYSE trading floor operates under a system known as open outcry, where brokers verbally announce their buy and sell orders.
The NYSE and other securities exchanges serve as venues where buyers and sellers can trade stocks, which are shares in a company. These companies must pay a fee to list their stocks on an exchange. Traders and companies on the exchanges operate independently of the U.S. government; however, they must comply with regulations set by the Securities and Exchange Commission (SEC). The SEC's rules are in place to regulate the market and prevent issues such as stock market crashes, which have historical precedence like the one in 1929 that led to the Great Depression.