Definition
The term discount brokerage house refers to a firm that charges a commission for providing services such as the buying and selling of securities. In order to keep costs low, discount brokerage houses will offer a limited number of services to their clientele.
Explanation
The primary service provided by discount brokers is the buying and selling of securities. The commissions charged for these services will be lower than a full-service brokerage house. Discount brokers first became popular in the 1980s, and this business model was facilitated by technological advances such as the electronic trading of securities. Their appearance allowed less wealthy individuals to participate directly in the stock market.
Under certain conditions, some discount brokerage houses may even offer high-net-worth individuals the opportunity to trade securities without a commission. Discount brokers can offer lower commissions by eliminating most of the individualized services provided by full-service brokers. For example, discount brokers do not offer investment advice and research assistance or offer services such as tax and estate planning to their clientele.
The advent of the internet in the 1990s further solidified the long-term outlook for discount brokers since investors could now enter their buy and sell orders using online accounts.
Related Terms
- The term online brokerage house refers to a firm that charges a commission for providing online services such as the buying and selling of securities. In order to keep costs low, online brokerage houses interact with their clientele via their website.
Moneyzine EditorSeptember 20th, 2023 
The term full-service brokerage house refers to a firm that charges a commission for providing a wide variety of financial and investment services. Through their brokers, full-service brokerage houses allow investors not only to buy and sell publicly traded securities but also provide investment advice to their clientele.Moneyzine EditorJanuary 18th, 2024
The term brokerage house refers to a firm that charges a commission for facilitating a variety of financial and investment services. Through their stockbrokers, brokerage houses allow investors to buy and sell publicly traded securities such as stocks and bonds.
Idil WoodallJanuary 9th, 2024
The term block trade refers to a privately negotiated futures or option that is not executed in a public auction. Block trades must exceed pre-defined quantity thresholds in order to be executed privately.Moneyzine EditorJanuary 8th, 2024
