With the introduction of modern-day discount brokers of the stock market, let’s see how the tables have turned and how the youth of today has started actively investing and trading in the stock market.
The stock market has existed for a long time, and with it, there have been various types of brokers too. Be it the offline brokers of the 90s or the instant brokers of today, they have been an essential part of the whole investing and trading ecosystem. However, as time passes, there have been plenty of changes in how they operate and also the charges involved in their processes.
Many modern-day brokers are of the opinion of offering their brokerage at a staggering discounted price, be it the account opening charges, the annual maintenance charges or the trading charges, they have redefined the way people invest and have also managed to grasp the attention of the youth to the stock market.
Before we step into the revolution, let’s tune into the history of brokerage firms and get to know a bit about them.
Starting with the definition of a stockbroker, A stockbroker (aka broker) is a financial market representative who operates and facilitates the purchase of securities (aka equity). Their role is to look after the purchase and selling of equity between buyers and sellers. These brokers date back to ancient times, it is believed that they were started as early as the 2nd Century BC in Rome. However, they too had their fair share of ups and downs from time to time owing to the collapse and formation of newer empires since then. But they didn’t trade stock for a long time. Formally stocks started trading in 1602 when the Dutch East India Company released the 1st publicly traded stocks through the Amsterdam Stock exchange and slowly started the rise of the profession of being a stock broker.
The types of stock market brokers:
There are various types of brokers, they can be defined as follows:
- Arbitrageurs: These brokers follow the practice of purchasing securities at a lower price and then selling the same at a higher price in a different stock exchange and profiting from the difference
- Jobbers: These can be defined as independent brokers and trade in securities for their own sake and not on behalf of others. They have no licensed professionals and thereby cannot deal in someone else’s name and also cannot levy charges or any form of commissions on others.
- Traditional or full-time brokers: These brokers provide a variety of options to customers. The services provided by these firms include securities trading, investing tips and advice, portfolio management, future planning, and also help with taxes on capital gains. All-in-all they provide a multitude of services for customers and were very popular in the 20th century. But they charge a hefty commission for their services and thus many refrained from joining hands with the stock market when these brokers were trending
- Discount brokers: These brokers dominate the brokerage market of today. They are also known as online stock brokers and their services are loved by all as of today. They offer not only an inexpensive investing and trading experience but also are convenient to the common man’s usability and are also reliable at the same time. These brokers don’t require the customers to be physically present at any time and allow the customer to purchase securities, bonds and others from anywhere with utmost security.
Discount brokers are said to be the prime reason for the revolution of brokerage firms and also why many new investors have stepped into the game. The advent of the internet has also largely contributed to the popularity of these brokers. They offer lightning-fast transactions with superior levels of security and also at a very low price. All these factors have led them to be the reigning brokers and they continue to uphold their delivery with every day that passes by.