A brokered certificate of deposit (CD) is a CD that an investor purchases through a brokerage firm, or from a sales representative other than a bank. Although the bank still initiates the CD, it outsources to firms that aim to locate potential investors. These types of CDs generally command a higher price as they are in a more competitive market.
*Certificates of Deposit are FDIC insured and offer a fixed rate of return if held to maturity. Brokered CDs sold prior to maturity in the secondary market may result in loss of principal due to fluctuations in the interest rate or lack of liquidity. Brokered CDs are registered with the Depository Trust Corp. (“DTC”). Brokered CDs with step-down and/or call provisions may be less favorable than traditional CDs without these features.