What is the primary function of a brokerage?

The primary function of a brokerage is to facilitate the buying and selling of securities. Brokerages serve as intermediaries between buyers and sellers in financial markets, executing trades on behalf of their clients. This role is crucial in ensuring liquidity and efficiency in the markets, allowing investors to enter and exit positions easily. By providing access to various financial instruments such as stocks, bonds, and mutual funds, brokerages enable individuals and institutions to construct and manage their investment portfolios effectively.

Brokerages might also offer other services, such as research and advice, but their core activity centers around executing trades. This fundamental aspect distinguishes brokerages from other financial entities, such as asset managers, who focus on managing investments, or lending institutions that provide loans. By understanding this primary function, one can appreciate the critical role brokerages play in facilitating market activities.