Brokered CDs are simply CDs offered by a financial intermediary. Brokered CDs often pay higher rates than CDs from your local bank because banks using brokered CDs compete in a national marketplace. These CDs are more liquid than bank CDs because they can be traded like bonds on the secondary market, but there is no guarantee you won't take a loss. The only way to guarantee getting your full principal and interest is to hold the CD until maturity. Brokered CDs often have call options.

Many banks are highly motivated to gain depositors beyond local walk-in customers. As a result, numerous banks utilize the nationwide brokerage community for distribution of CDs. CDs obtained in this manner are referred to as Brokered CDs. Brokered CDs are simply Certificates of Deposit of banks sold through financial consultants. Most Brokered CDs are issued at "par", which means the original investment and the amount received at maturity are identical.

CD transactions can be easily executed within the Bonds.com CD Exchange. Investors do not receive physical certificates for their Brokered CDs, but instead receive a periodic account statement detailing their CD holdings.

Brokered CDs are held in custody with the Depository Trust Company (DTC), a sub-custodian. DTC is the central clearing house for a massive electronic book-entry system of settlement and registration of investment products. DTC maintains records of each participating broker-dealer's holdings. In turn, each broker-dealer maintains records of the individual account holders within their firm.

Most, though not all, deposit brokers are securities brokers registered with the Securities and Exchange Commission. Other deposit brokers are subject to regulation by different regulatory bodies or may not be subject to regulation at all. This description of Brokered CDs is based upon standard practices in the securities industry. Investors should compare these practices to the practices of any deposit broker offering a CD.