Brokerage account

An account with a regulated firm that holds your cash and securities and routes your orders to trading venues on your behalf.

Example

You transfer cash to the account, instruct a purchase, and the broker matches it at an exchange and settles the trade over the following business days.

Important

The financial strength, regulatory status and asset-segregation practices of the firm holding the account are a real question. Check which investor-protection scheme covers it and up to what amount, before you need to know.

Related terms

• Street name — The common arrangement in which a broker or its custodian appears on a company's share register while your entitlement is recorded as a book entry in the broker's own records.
• Custody — The safekeeping of securities by a regulated institution on behalf of their beneficial owner, including holding the record of ownership and processing corporate actions.
• Public markets — Markets where anyone can buy or sell a security, such as a stock exchange.

Lessons that explain it

• What a share actually is: last in line, and why that is the point — A share of common stock is a residual claim - everything that is left after every other claimant has been paid. That single fact explains most of what equities do. (9 min)

All 578 terms in the Investing glossary