In the world of finance, brokerage is a kind of commission or fee that a stock market professional, called corridor, applies to a company or someone interested in investing to provide a service. The brokerage is established with a special contract called a “brokerage contract”. This contract is between a professional person in finance and investment and the person interested in accessing an asset.
It is very important to differentiate brokerage from a commission, as a broker may not require payment of this fee, but will simply charge his client a commission for the work of trading assets. In a simple way, brokerage allows access to the asset trading service and the commission serves to pay for the services that the broker performs in the Stock market.
Whether or not a broker asks for a brokerage will depend in part on the type of market you want to access or the type of assets you want to operate with, as each of them will have different requirements.
Differences between the commission contract and the brokerage contract
There are differences between the two contracts that are signed with a stock market specialist that must be known to the interested party:
- Commission contract: you act on your own behalf. The broker will operate according to its specialized knowledge and taking the appropriate actions, always adapting to what the client wants.
- Brokerage contract: the broker executes the actions always following the client's will. The broker will only carry out activities that facilitate access to the securities and asset markets, but will not act on its own behalf. Thus, the broker will advise at all times on the most beneficial operations that the client can obtain.