Brokerage

A brokerage, or brokerage firm, generally employs brokers on commission to act as intermediaries between buyers and sellers of securities in financial markets and other markets. Brokerages gain revenue by also collecting a percentage of the transaction, either from one side or both. In the U.S. they are regulated by the Securities and Exchange Commission (SEC).

Full-service or Discount?

Traditional brokerages have charged hefty fees for providing investors and traders with a broad range of financial products backed up by plenty of investment research and advice. Such firms are usually called full-service or traditional brokerages and include some of the industry's biggest and oldest names.

Recently, however, investors have moved increasingly towards discount brokerages, which charge much lower transaction fees but typically offer fewer products and services. Discount brokerages usually trade over the Internet and most compete on transaction fees and margin rates, making them popular with individual investors.

Recent rankings

Numerous on-line surveys of discount brokerages have consistently ranked the sector's biggest names in their top 10 on key criteria. In the U.S., for example, Scottrade took the 2007 J.D. Power award for Online Investor Satisfaction, while Charles Schwab & Co. won top 2007 ranking in MoneyBlueBook, as did T.D. Ameritrade with TradeWiser.

Tables ranking full-service brokers in the same way as discount/on-line brokers are rarer. One widely-cited U.S. ranking that employed a combination of factors including customer satisfaction ranked Edward Jones the best full-service brokerage ahead of Merrill Lynch, UBS and A.G. Edwards.