Why do we need a brokerage?

External question — Quantitative Finance Stack Exchange Author: cc88 Original post: https://quant.stackexchange.com/questions/70175 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I understand that there exist direct stock plans that allow you to buy shares directly from a company. However, these have obvious and large downsides, so we can disregard them. Furthermore, I am not talking about brokers who give investment advice and similar services, but only referring to a brokerage service or processing transactions for an investor. Therefore, why cannot every investor connect directly to an exchange and make transactions there, rather than requiring a middle-man in a form of a brokerage? I am aware that this would require some adjustment on the exchange side, but they are incentivized as they would be able to use this as an expansion of their business operations.