Brokerage

Individual investors cannot normally trade directly on stock exchanges. They open an account with a brokerage, which places orders for them, holds their investments and handles settlement.

Brokerages range from full-service firms, which offer personalised advice, research and financial planning for higher fees, to discount and online brokerages, which provide low-cost trading platforms with little or no advice. Many online brokerages now charge very low or zero commissions on share trades.

Brokerages earn money in several ways, including commissions, account fees, interest on clients' cash balances, interest on margin loans and payments related to how orders are routed.

When choosing a brokerage, investors usually consider costs, the range of investments offered, ease of use, research tools and whether client assets are protected. In many countries, client money and investments are held separately from the brokerage's own assets, and investor protection schemes may cover losses up to a limit if the firm fails.