First of all, we should know who is a broker? Any individual or a firm buying or selling anything on the client’s behalf in return of some commission is a broker. Investment broker basically works to connect clients with traders to invest their money. They are usually licensed by the government regulatory authority and works for commission which can be a fixed value or a percentage of value of trading happened. Basically they make money by charging commissions on each trade and collecting fees from investors. For investment purpose, client is required mandatorily to involve a broker in between. The investment broker can be an individual or a firm offering different services.
Investment broker types:
There are various types of investment broker identified by the regulatory authority:
- Discount Brokers: These types of brokers while trading on behalf of the clients usually charge less fee or offer discounts on commission. They don’t provide any add-on services.
- Prime Brokerage: Usually bigger and major brokerage firms fall under this category as they have leverage resources to provide service needed by high value clients as risks have to be diversified in different portfolios.
- Online Investment Brokerage: It is the latest model of brokerage industry. Almost all brokerage firms are available online and offer various investment opportunities to the clients.
- OTC Brokers: OTC or over the counter brokers trade in stocks, bonds and derivatives which are not listed.
- Exchange brokers: These brokers basically facilitate the exchange of assets in exchange of a commission.
- Real Investment Brokers: These brokers facilitate the deal regarding the real estate like plot, house, hotel or a conglomerate. The deals can be buying, selling or leasing.
- Raw material brokers: These brokers help industries to source the good quality raw material to make the end product.
- Forex Brokers: These brokers indulge in foreign exchange trading which is buying and selling of currencies.