Definition of online broker

in general, any broker that provides trading services to its customers over the Internet, which includes established full-service brokers such as Merrill Lynch as well as a range of discount- and deep discount brokers. The connotation of the term online broker, which is used interchangeably with electronic broker and cyberbroker, is a deep discount broker whose principal, if not only, existence, is on-line. These on-line brokers typically charge flat rates, usually for transactions up to 1,000 shares, with additional fees for larger or more complicated orders, a fraction of the amounts charged by full-service brokers. The downside is minimal service, the risk of technical interruptions, and the possibility that low publicized transaction costs may hide extra costs associated with third market executions.