Category:Brokerage firms

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Like any type of business, a brokerage firm has various departments to perform different functions, all of which are related in one way or another to the trading and selling of securities. However, not all firms have every department that follows. In fact, many small firms, called specialty firms or boutiquesperform just one of the functions. Venture Capital [ Back to the Top ] The venture capital division of a large firm or a small firm that specializes in venture capital provides very small companies with "seed money.

In exchange for providing the start-up capital, the venture capital usually acquires a partial ownership interest in the new company. This type of investment can be very risky as most start-up companies do not survive and grow. The highly skilled professionals who brokerage companies for this group advise the firm's corporate clients on the most cost-effective way brokerage companies them to raise the capital needed to finance their growth.

Usually this means selling new shares of stock or bonds of brokerage companies type or another to investors. Municipal Finance [ Back to the Top ] The municipal finance department is responsible for assisting state and local governments in raising the money they need to build schools, roads, hospitals brokerage companies the like.

States brokerage companies local governments raise capital primarily by selling bonds to investors. The principal attraction of municipal bonds is that the interest they pay can be exempt from federal income tax. The Syndicate Department The corporate and municipal finance departments do brokerage companies sell securities.

This task falls to the syndicate department, which coordinates the initial sale of new securities to both individual abd institutional investors. The work of this department is discussed in greater detail in brokerage companies section on underwriting. Institutional Sales [ Back to the Top ] The institutional sales department is responsible for dispensing investment advice to, and soliciting securities orders from, the firm's institutional clients, such as banks, brokerage companies companies, pension plans, and the like.

The professionals who interact with these brokerage companies are called institutional brokers. Retail Sales [ Back to the Top brokerage companies The retail sales department is responsible for dispensing investment advice to, and soliciting securities orders from individuals.

This "advisor" can be either an individual or a firm. Individuals select portfolio brokerage companies on the basis of their investment philosophy and performance record. Since the managers have the authority to decide which securities to buy or sell for the client, as well as when to buy and sell them, they are considered to be a fiduciary.

Under the law, fiduciaries must always place the best long-term interests of the client ahead of their personal interests or the interests of the firm. Trading Brokerage companies [ Back to the Top ] The trading deparment is responsible for executing clients' securities orders. This department effects the actual purchases and sales brokerage companies securities, in accordance with the clients' instructions.

In addition, the trading department tries to buy and sell securities profitably with the firm's own money. Operations [ Back to the Top ] The operations department is responsible for processing all of the paperwork generated by the firm's other departments, most of it having brokerage companies do with "clearing" the firm's trades.

This department also handles all of the clients' bills and statements. Compliance [ Back to the Top ] This department is responsible for making sure that all other departments within the firm adhere to the various securities laws and regulations imposed on the industry by federal and state securities agencies. Research [ Back to the Top ] The research department explores investment opportunities to determine brokerage companies are the most suitable and beneficial for clients and for the firm's own trading activities.

The cost of providing this research is built into the commisions that the clients pay when they buy and sell secrities. Another type of brokerage firm, called a discount firm, does not provide its clients with research. Instead, they charge reduced commision rates for executing orders and clearing trades. Go back to the:

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A brokerage firm , or simply brokerage , is a financial institution that facilitates the buying and selling of financial securities between a buyer and a seller.

Brokerage firms serve a clientele of investors who trade public stocks and other securities, usually through the firm's agent stockbrokers. The staff of this type of brokerage firm is entrusted with the responsibility of researching the markets to provide appropriate recommendations, and in doing so they direct the actions of pension fund managers and portfolio managers alike.

These firms also offer margin loans for certain approved clients to purchase investments on credit , subject to agreed terms and conditions. Traditional brokerage firms have also become a source of up-to-date live stock prices and quotes. 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. Thomas Smith 6 March Regulation of Investment Companies. Lexis Nexis Matthew Bender. Retrieved from " https: Brokerage firms Financial services. Views Read Edit View history. This page was last edited on 8 February , at By using this site, you agree to the Terms of Use and Privacy Policy.