Question

2- what are two major differences between brokers (such as security brokers) and depository institutions (such as commercial banks)?

Answer 1

The major types of depository Institutions are commercial banks and credit unions. They Accept deposits from individuals and businesses and use them from lending to borrowers.

Brokers act as a middleman between the buyers and sellers and earn commission in the process.

The first difference between a broker and depository institutions that the depository Institutions accept deposits from the general public while a broker takes no such deposit for further lending.

The Other difference lies in the scale of operations. While brokers deal on a small scale depository Institutions are usually large Institutions which are professionally managed and deal with huge amount of funds.