Discount stock brokerage firms
A discount broker or an online broker is a firm that charges a relatively small commission by having its clients perform trades via automated, computerized trading platforms rather than by having an actual stockbroker assist with the trade.
Most traditional brokerage firms offer discount options and compete heavily for client volume due to a shift towards this method of trading. Other ways to lower costs for these brokers is by executing orders only a few times a day by aggregating orders from a large number of small investors into one or more block trades which are made at certain specific times during the day. They help lower costs in two ways:. Since investor money is pooled before stocks are bought or sold, it enables investors to contribute small amounts of cash with which fractional shares of specific stocks can be purchased.
This is usually not possible with a regular stockbroker. Many broker-dealers also serve primarily as distributors for mutual fund shares. These broker-dealers may be compensated in numerous ways and, like all broker-dealers in the United States, are subject to compliance with requirements of the US Securities and Exchange Commission and one or more self-regulatory organizations , such as the Financial Industry Regulatory Authority FINRA.
The forms of compensation may be sales loads from investors, or Rule 12b-1 fees or servicing fees paid by the mutual funds. From Wikipedia, the free encyclopedia. Comparison of online brokerages in the United States.
Retrieved 10 October British Columbia Securities Commission. In the real estate industry, a discount brokerage helps clients buy and sell real estate properties, often listed on the MLS. The growth of discount real estate brokers has caused considerable concern with their full-service, full-fee competitors.
Discount brokers in the financial services sector provide insurance products, such as life insurance and car insurance , on a discounted basis. The main difference they present to a typical insurance broker is that they work on a lower commission basis, and as such are often cheaper.
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