Securities Brokerage

A Securities Brokerage is a firm functioning as a Securities Broker. A Securities Broker does the buying and selling of securities on behalf of the investors. The Security Broker functions like an agent who bridges the gap between the security buyers and sellers.
A stock exchange transaction is conducted between entities who are members of the stock exchange and transactions like this are performed with the help of a Securities Broker. Further to buying and selling securities and stocks for the clients, Security Brokerage also provides valuable advice to the clients regarding which stock or mutual fund to purchase etc.

From the 1980s, Securities Brokerage Firms are allowed to act as market makers so long the suitable Chinese walls are there.

In the United States, while the Securities Broker functions like an agent, he usually takes a charge from the client in the form of a flat fee and/or a percentage-based commission for accomplishing the deal.
The quote offered to the client has to be the best available price in the market. When a Securities Broker functions as a principal, the transaction can be done with another market player or one of the Security Broker’s clients. While transacting with a client in a principal capacity, the brokerage firm informs the client and charges a markup or markdown from the existing market price.


In the United Kingdom (UK), the function of Security Brokers is similar to the U.S. Security Brokers, but the only difference is that while transacting with a client in principal capacity, the Security Broker is bound to inform the client and does not charge any commission.


In other countries, it is assumed that more or less the same rules are followed.

Security Brokerage Terms

The terms which are used frequently in Security Brokerages include the following:
Front Office
Back Office
Retail Broker
Low Cost Broker
Prime Brokerage
Discount Brokers

With the arrival of Online Stockbroking facilities, most of the times the client does not have to contact his Stock Brokerage Firm. The Stock Brokerage system does all the Security Brokerage functions. It collects the best price from the market and performs the trading.

The roles that are similar to a Securities Broker are financial advisor, investment advisor, and others. The Securities Brokers sometimes or solely act as principals and trade on their own behalf in case of speculations. For such instances, they are termed as traders, stock traders, or dealers.

The leading Securities Brokerage Firms or Securities Brokerages include the following:
Merril Lynch & Co, Inc.
E.F. Hutton & Co
Bache & Co
Paine Webber & Company
Francis I. Dupont & Co
Dean Witter Co
Goldman Sachs
Bear Sterns
Edward Jones Investments
Stifel Nicholas
Raymond James
TD Ameritrade
Charles Schwab


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Last Updated on : 26th June 2013

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