A brokerage house, also called a brokerage firm, is a company licensed to buy and sellstocks or securities. Acting as an intermediary between buyers and sellers, a brokerage housetypically employs brokers who carry out the wishes of the firm's clients as they pertain to thetrading of stocks. Broker services are usually provided on a commission basis. Commissionamounts charged for the buying and selling of securities vary with each brokerage house. Often,the price per trade is indicative of the level of service the firm offers.In addition to commissions, a brokerage firm may chargevarious other fees. These fees may include charges for transferringassets, closing an account, and wiring money. Additionally, abrokerage firm may require the payment of annual services chargesand fees related to periods of account inactivity. Depending on thepolicies of the brokerage house, a client's account may also incur afee for failing to meet a minimum required account balance.A brokerage house may offer a variety of investment products or specialize in just one ortwo. Typical choices include stocks, mutual funds, and options, as well as government andcorporate bonds.
Over-the-counter (OTC) bulletin board stocks may be offered as well.In addition to the trading of various investment products, a brokerage firm may offercertain banking services. These services may range from money market sweeps and check writing to visa and ATM cards. Cash kept in a brokerage house money-market account maycarry a higher interest rate than money held in a regular bank account.Often, a brokerage house may offer market research and investing strategies as well.Though much of the information uncovered by such research may be available on the Internet,many individuals don't have the time or the inclination to look for it. In such cases, having anaccount with a firm that conducts in-depth investment research may be extremely beneficial.
Kinds of Broker
There are two kind of broker which is full-service broker and discount broker. Theinvestor has to decide which broker he need for the services they provideFull-Service Brokers:These brokers tend to offer a wider variety of financial products, investmentadvice, and research than discount brokers. They may offer stocks, bonds, derivatives,annuities, and insurance. In exchange, they charge considerably higher fees.Full-service brokers solicit business and are paid mostly by commissions. Thismeans they get compensated not according to how well your portfolio does, but by howoften you trade. In turn, that means it's in your broker's interest to have you trade as oftenas possible.