Brokerage
A brokerage gives traders the ability to buy and sell assets they can’t access directly. When someone places an order, the brokerage routes it to the appropriate exchange and ensures it follows market rules. This setup allows individuals and institutions to participate in markets without managing their own trading infrastructure.
Modern brokerages offer far more than trade execution. Many provide research tools, trading platforms, charting features, and educational resources. Some focus on low-cost execution, while others emphasize advanced tools or specialty market access.
Behind the scenes, brokerages handle important operational tasks. They maintain customer accounts, store cash and securities, and ensure compliance with regulations. These responsibilities help create a safe and organized environment for trading activity.
Why It Matters
Brokerages make financial markets accessible, secure, and manageable for everyday investors and professionals. Without them, traders would struggle to execute orders, manage assets, or access reliable market tools.
How do brokerages execute trades?
Brokerages route orders to exchanges, market makers, or alternative trading systems depending on the asset and market conditions. They verify that orders meet regulatory and risk requirements before sending them out. Once executed, the brokerage updates the customer’s account and confirms the trade. This entire process often happens in milliseconds. Reliable routing is essential for fair pricing and smooth execution.
What types of brokerages exist today?
There are full-service brokerages, discount brokerages, and specialized electronic brokers. Full-service firms offer research, advice, and guided portfolio management. Discount brokers focus on low-cost execution and simple platforms. Electronic brokers offer advanced tools, global market access, and APIs for automation. Each type serves different needs depending on the trader’s experience and strategy.
How do brokerages keep customer accounts safe?
Brokerages follow strict regulations around custody, reporting, and account protection. They separate customer funds from company assets, reducing the risk of misuse. Many brokerages participate in insurance programs that protect securities or cash up to certain limits. They also use identity verification, encryption, and monitoring tools to prevent unauthorized access. These safeguards create a trustworthy trading environment.
Real-World Example
An investor wants to buy shares of a telecom company. They log into their brokerage account, enter the ticker, and place a limit order. The brokerage sends the order to the exchange, executes the trade, and updates the investor’s portfolio—all within seconds.
Brokerage and FinFeedAPI
FinFeedAPI’s Stock API can help brokerages strengthen their trading platforms with clean, reliable market data.
They can integrate historical data and symbol metadata to power charts, watchlists, and risk tools for clients.
This reduces internal data-management overhead and helps brokerages deliver a smoother, more informative trading experience.