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Discount broker

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Title: Discount broker  
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Subject: Investment broker
Publisher: World Heritage Encyclopedia

Discount broker

A discount brokerage is a business that charges clients significantly lower fees than traditional brokerage firm but without providing investment advice. Discount brokers typically allow investors to buy and sell securities on-line while offering comparatively fewer services and/or support.


In the securities industry, a brokerage helps clients buy and sell securities on an appropriate exchange. Before the advent of discount brokers it used to be that only the wealthy could afford a broker and access to the stock market. However the development of internet and electronic trading helped to develop discount brokers, which allow investors to trade for much smaller fees.

Discount brokerages usually allow their clients to trade for their own account with little or no action with a live broker. In addition some brokers offer no-commission trades to their clients that hold a balance greater than a specific amount with them.

Typically, discount brokers provide advanced electronic trading platforms which may be appealing to frequent and active traders but may deter some novice investors. Discount brokers typically do not provide financial advice or guidance and provide instead a service aimed at self directed investors. Traditional brokers in contrast will often provide financial advice and investment planning as well as related wealth management services.

All brokerage firms, including discount brokerage and full-service discount brokerage are regulated in the same way and are licensed by each countries financial regulatory authority.

Brokerage firms

United States

In the US ultimate responsibility for policing securities legislation falls under the Securities and Exchange Commission (SEC). The SEC has delegated some of its responsibilities to self-regulatory organizations, the main one covering brokers is the Financial Industry Regulatory Authority (FINRA).[1]

List of the major discount brokers in the US that have been verified as FINRA Broker Dealers and FINRA Member Firms (these are direct US broker dealers, not divisions of other US or internationally based member firms that are registered broker dealers)[2] include:

Main article: Comparison of online brokerages in the United States

United Kingdom

Other Countries

  • Zerodha (India)

Real estate

In the real estate industry, a discount brokerage helps clients buy and sell real estate properties, often listed on the MLS. The growth of discount real estate brokers has caused considerable concern with their full-service, full-fee competitors. In the US, the US Justice Department settled in 2008 with the National Association of Realtors to allow discount brokers to have access to the same MLS home listings as full-service agencies[3]

See also


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