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Investment Dictionary

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Brokerage Company


A Brokerage Company is a financial institution that has a license to provide intermediary services for a securities trading to the clients. Every retail client cannot by securities on stock exchange by himself because only a member of stock exchange can put orders directly to the exchange. Brokerage companies become a members in stock exchanges, pays some fees for the membership (those would be too high for retail investors) and transfers orders from clients to exchange. 


Brokerage firm may also execute transactions without help of stock exchange implementing OTC market deals. Brokerage company takes fees from its customers for executed orders. Such fees can be based on volume of securities, invested amount in money, applied minimal charges, custodian charges, administration charges or other for investing applied charges.


Depending on the country (different regulatory environment) and the license category brokerage houses can provide more services additionally to securities trading mediation: give investment recommendations, manage investment portfolios, provide market researches, and provide some investment banking services. Also if license category allows it, brokerage company may make investments on its own account.


Very often brokerage firm is a part (or a core) of financial investment group or investment bank group that offers more investment services for its customers. Securities trading mediation includes offering of such investment products as:



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