In deposit terminology, the term Brokered CDs refers to a Certificate of Deposit issued by a bank but obtained through a brokerage house or other third party. Brokered CDs typically pay a higher interest rate than regular CDs due to competition among banks.
For example, Brokered CDs are typically purchased in bulk by brokerage houses and other third parties in order to resell them to their customers. The Brokered CDs often come in lot sizes of $1,000 and offer small investors interest rates on the par with larger CDs, often providing an interest rate up to one percent higher than normal CDs. While Brokered CDs will still pay out the principal amount at maturity, a certain amount of market risk exists if the investor does not plan on holding the Brokered CD to maturity.