A brokerage house is a licensed company that buys and sells stocks or securities, employing brokers to fulfill clients’ trading wishes on a commission basis. They may charge additional fees for other services such as banking, market research, and investment strategies.
A brokerage house, also called a brokerage firm, is a company licensed to buy and sell stocks or securities. Acting as an intermediary between buyers and sellers, this company typically employs brokers who fulfill the wishes of the company’s clients when it comes to stock trading. Broker services are generally provided on a commission basis.
Commission amounts charged for buying and selling securities vary with each brokerage house. Often, the price per transaction is indicative of the level of service that the company offers. For example, a brokerage firm that charges fees at the lower end of the scale may not execute trades as quickly as one that charges higher fees. Similarly, a company that charges higher commissions generally offers a more personalized service.
In addition to commissions, a brokerage firm may charge other fees. These fees may include charges for transferring assets, closing an account, and transferring money. In addition, a brokerage firm may require payment of IRA custodial fees, as well as annual service charges and fees associated with periods of account inactivity. Depending on brokerage firm policies, a client’s account may also incur a fee for not meeting the required minimum account balance.
A brokerage firm may offer a variety of investment products or specialize in just one or two. Typical options include stocks, mutual funds, and options, as well as government and corporate bonds. Over-the-counter (OTC) bulletin board stocks may also be offered.
There are several different ways to execute trades. A brokerage firm may choose to use all or only some of them. For example, a business may allow trading over the telephone or the Internet, as well as other methods.
In addition to trading various investment products, a brokerage firm may offer certain banking services. These services can range from money market sweeps and check writing to visa cards and ATMs. Cash held in a brokerage money market account may carry a higher interest rate than money held in a regular bank account.
Often a brokerage firm can also offer market research and investment strategies. Although much of the information uncovered by such research may be available on the Internet, many people do not have the time or inclination to search for it. In such cases, having an account with a company that does in-depth investment research can be extremely beneficial.
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