Brokerage

Brokerage
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Brokerage is a firm which handles transactions on the side of a client. There are different types of brokerage firms. Some offer handling of transactions. Some have services which give advice to the clients on how to invest their money properly. Brokerage firms earn their money from commissions. Before each transaction is made, the broker and the client agree on a percentage which the broker will receive after the transaction. The way the client gives orders is different. They can do it personally, by meeting with the broker, by phone, by mail etc.  Some brokerage firms are situated only online, and these firms ask of you to give your orders via mail rather than phone because this way of business is less expensive.

There can be two main types of brokerage accounts. That is advisory and discretionary. In the advisory account, the broker can make some investment decisions, which are limited, without the need to consult with the client. The discretionary account gives much more independence to the broker. The broker is given the authority to buy and sell absolutely or with some restrictions.  In order for the brokerage firms to do their work legally, they need to register with the SEC – Securities and Exchange Commission (SEC).

Brokerage firms can be offices with only a couple of people working in it, but they can also be huge firms which have offices all around the world.

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