Brokerage house

Brokerage House is a financial institution that facilitates the buying and selling of financial securities between a buyer and a seller. Brokerage houses are compensated via commission after the transaction has been successfully completed. They play a crucial role in the field of investment banking, and they can also provide other services such as wealth management and asset management.

History

The concept of a brokerage house dates back to the Roman Empire, where brokers were used to manage transactions. The modern concept of a brokerage house, however, began in the late 18th century with the establishment of stock exchanges in major global cities such as London and New York.

Functions

Brokerage houses perform several key functions in the financial markets. They act as intermediaries between buyers and sellers, facilitating transactions of securities. They also provide research and advisory services to their clients, helping them make informed investment decisions. Some brokerage houses also offer asset management services, managing the investments of their clients on their behalf.

Types of Brokerage Houses

There are several types of brokerage houses, including:

• Full-Service Brokerage Houses: These firms offer a wide range of services, including research, investment advice, and wealth management. They typically charge higher fees than other types of brokerage houses.

• Discount Brokerage Houses: These firms offer fewer services than full-service brokerage houses, but they charge lower fees. They are often used by do-it-yourself investors who prefer to make their own investment decisions.

• Online Brokerage Houses: These firms offer their services primarily or exclusively online. They often charge lower fees than traditional brokerage houses, and they may offer a range of tools and resources for investors to use.

Regulation

Brokerage houses are regulated by various governmental and non-governmental organizations, including the Securities and Exchange Commission (SEC) in the United States, the Financial Conduct Authority (FCA) in the United Kingdom, and the Securities and Futures Commission (SFC) in Hong Kong. These organizations work to ensure that brokerage houses operate in a fair and transparent manner, protecting the interests of investors.

See Also

• Investment Banking
• Stock Exchange
• Securities and Exchange Commission
• Financial Conduct Authority
• Securities and Futures Commission