Investors must be careful to choose brokers that are fully regulated. The U.S. Securities and Exchange Commission (SEC) is the government agency that regulates the securities industry in the United States. The Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC) also play important parts in keeping U.S. investments safe.
Choosing the Right Stock Broker
Investors should make sure their broker is a member of FINRA or another independent self-regulatory organization. FINRA regulates and licenses brokerage firms and individuals. FINRA can fine or otherwise discipline its members. If a brokerage fails or goes bankrupt, SIPC provides insurance to protect customer assets up to $500,000 (of which up to $250,000 can be cash).
These are some of the top regulated brokers in the United States based on investment offerings, international access, fees and commissions, speed and security, support, educational resources, and ease of use.
Fidelity Investment's competitive brokerage rates, range of offerings, in-depth research, investor education resources, and excellent customer service make it a popular choice. There were over 28 million Fidelity accounts with assets totaling approximately $7.4 trillion as of March 2019. Fidelity is a preferred platform for international investing as well. It provides its clients access to stock exchanges in 25 different countries through a single account.
Interactive Brokers is known for its low commission rates and offering broad access to international markets. The firm's portal provides access to 120 exchanges, over 100 currency pairs, a host of investment products, extremely low margin rates, and a wide range of trading tools. It is well suited for active traders, advanced investors, and institutions.
Charles Schwab is an iconic brand, and it lives up to its reputation in terms of its offerings and service. The firm handled client accounts with total assets worth a whopping $3.7 trillion as of August 2019. It offers stock trades at a flat rate of $4.95. Schwab also has a convenient platform. It provides research, customer service, trading, and advisory services. Charles Schwab acquired OptionsXpress, Compliance11, and ThomasPartners between 2011 and 2012.
TradeStation provides a sound desktop platform and mobile trading app to cater to all categories of users, including active traders, professional investors, and institutions. The firm focuses on trading technology, which kept it ahead of most competitors during the last several decades. TradeStation has a slightly complex commission structure to suit different investor needs. However, a simple $5 per trade plan for stocks and ETFs was available as of September 2019.
TD Ameritrade is among the top-ranking stockbrokers in the United States. It is well known for providing high-quality services. This is part of the reason it has a considerable account base despite having trading charges on the higher side (a flat rate of $6.95 per trade). TD Ameritrade provides a 24/7 customer support system, a user-friendly website, multiple mobile apps, abundant research, and advanced trading tools. Its trading and investing platform hosted more than 11 million accounts with total assets of over $1 trillion as of 2019. TD Ameritrade is committed to customer service, and it still operates over 275 branch offices across the United States.
Founded in the early 1980s, E*TRADE is one of the top U.S. trading platforms. It offers a well-rounded set of services, which tends to outweigh its slightly higher cost of $6.95 per trade. E*TRADE makes essential banking services available to its customers in addition to brokerage services. It provides a user-friendly trading experience, in-depth research, innovative apps, and high-grade customer service for both new and seasoned investors. In 2016, E*TRADE acquired OptionsHouse.
Merrill Edge was launched in mid-2010, a year and a half after the acquisition of Merrill Lynch by Bank of America. As an extension of Bank of America, Merrill Lynch gets to offer its services to the existing clients of Bank of America. Investors and traders other than clients of the bank are also welcome to open an account with Merrill Edge. It provides regular stock trades at a flat rate of $6.95. Merrill Edge offers robust research, superb portfolio analysis, and excellent educational resources.
Ally Invest was launched in 2017 after Ally Financial acquired TradeKing in 2016. It is quickly becoming a popular stockbroker online, with various offerings ranging from mutual funds and ETFs to futures and stocks. The flat rate for trades is $4.95. Customer support is available 24/7 via phone, email, or chat.
The Bottom Line
All the brokerage firms mentioned above are regulated in the United States. They have unique selling propositions like premium client services, low commission rates, or high-quality trading tools. Most importantly, these brokers fulfill the regulatory criteria of the SEC. They also have SIPC insurance, which protects investors if the broker goes bankrupt.