The term online brokerage house refers to a firm that charges a commission for providing online services such as the buying and selling of securities. In order to keep costs low, online brokerage houses interact with their clientele via their website.
The primary service provided by online brokers is the buying and selling of securities. Most discount brokers are online brokers, and the commissions charged for conducting transactions will be lower than a full-service brokerage house. Online brokers first became popular during the rapid growth of the internet in the mid to late 1990s, as communication technologies improved the speed at which transactions could be completed.
Since they provide no other service other than the buying and selling of securities, online brokerage houses compete for clients by charging low transaction fees. In addition to common and preferred stock, investors can buy and sell bonds, options, as well as futures contracts.