What is Sub Broker

Discover the role and responsibilities of a sub-broker and how they assist investors and traders.
What is Sub Broker
3 mins
20 October 2023

An Authorised Person (AP or a sub-broker are professionals who act as an intermediary between the main broker and the client. They assist clients in various activities such as financial transactions and paperwork. In return for the services rendered by the sub-brokers to the brokers, they receive a certain commission from the transaction done by the investors. Sub-brokers are authorised by the main broker to act on their behalf. They provide client services such as investment advice, portfolio management, and research reports. However, being registered as a sub-broker does not authorise them to engage in any of these activities. They must obtain the relevant registration from the regulatory authority, specifically, SEBI, in order to provide these services.

Sub-brokers also help clients with regulatory compliance and documentation.

Understanding sub-brokers

  1. Authorisation: Sub-brokers are authorised by the main broker to act on their behalf. They are required to follow the rules and regulations set by the main broker and the regulatory authorities.
  2. Client services: Given that they have relevant registration from SEBI, sub-brokers may provide various client services such as investment advice, portfolio management, and research reports. They also assist clients with regulatory compliance and documentation.
  3. Commissions and fees: Sub-brokers receive a commission from the transactions done by the clients in return for the services rendered by them to the brokers.
  4. Regulatory compliance: Sub-brokers are required to comply with the rules and regulations set by the regulatory authorities. They must ensure that their clients are aware of the risks involved in investing in securities.
  5. Market reach: Sub-brokers help in expanding the market reach of the main broker by bringing in new clients. They also help in retaining existing clients by providing them with quality services.

Additional read: Difference Between Stock Market and Commodity Market

Sub-brokers play an important role in the stock market industry by providing physical assistance to investors who prefer having an expert to assist them in transactions.

Difference between sub-broker and stockbroker

Aspect

Broker

Sub-broker

Definition

Authorised member of a stock exchange

Gets registered through a broker

Role

Executes trade on behalf of clients

Acts as an intermediary between broker and client

Authorisation

Registered with SEBI (Securities Exchange Board of India) and Exchanges

Appointed through registration in an exchange via one of its members

Services provided

Purchase and sell stocks and securities on behalf of clients

Assist in client acquisition and order execution

Fee structure

Charge brokerage fees (based on trades or flat rate)

Earn commissions from client transactions

Regulatory compliance

Registered and authorised to transact in asset markets

Required to comply with SEBI regulations

Relationship with main broker

Independent, not under the guidance of another entity

Works under the supervision of the main broker


How to become a sub-broker

Embarking on a career as a sub-broker is an exciting journey into the world of finance, but it requires careful preparation and adherence to certain processes. Below, we outline the crucial steps to becoming a sub-broker, with reference to regulatory requirements and industry best practices.

  1. Research and education
    The foundation of a successful sub-broker begins with research and education. It is imperative to gain a solid understanding of the financial industry and its intricacies. Whether through formal education or self-study, acquiring knowledge about stock markets, investment instruments, and regulatory compliance is crucial.
  2. Locate a reputable registered stockbroker
    The next step involves establishing a partnership with a reputable registered stockbroker. This main broker will be your guiding force throughout your journey as a sub-broker. Choose a main broker with a strong reputation, as their support and guidance will be invaluable.
  3. Contact the stockbroker
    Initiate contact with the selected stockbroker. This is the point at which your journey as a sub-broker takes shape. Your main broker will guide you through the application and onboarding process, ensuring you are well prepared for your new role.
  4. Compliance and documentation
    Compliance with regulatory requirements is non-negotiable. Sub-brokers are obligated to adhere to the rules and regulations set by regulatory authorities. Additionally, it is your responsibility to ensure that your clients are aware of the risks associated with investing in securities. Compliance and proper documentation will protect both you and your clients.
  5. Application and agreement
    Following the completion of compliance and documentation procedures, sub-brokers must complete an application form and sign an agreement with the main broker. This formalises your association and clarifies the terms of your partnership.
  6. Licensing and registration
    To operate as a sub-broker, you must obtain the necessary licences from regulatory authorities. Licensing demonstrates your competence and adherence to industry standards. Additionally, registration with the stock exchange is required for you to carry out your activities within the market.
  7. Training and onboarding
    Successful sub-brokers undergo training and onboarding processes provided by the main broker. This is an essential step that equips you with the knowledge and tools to offer quality services to your clients. You will learn about the policies, procedures, and systems of the main broker, which are vital for smooth operations.
  8. Build and expand clientele
    Once you have successfully navigated the earlier steps, it is time to put your knowledge and expertise to work. Your focus should be on building and expanding your clientele. This involves providing excellent services to your clients, offering investment advice, and ensuring their financial goals are met. The growth of your clientele will be a testament to your success as a sub-broker.

Conclusion

Sub-brokers play an important role in the stock market industry by providing physical assistance to investors who prefer having an expert to assist them in transactions. Becoming a sub-broker requires research, education, compliance with regulatory requirements, licensing, training, and building clientele.

Sub-brokers can start their journey by researching and educating themselves about the industry. They should locate a reputable registered stockbroker and contact them to initiate the process. The next step is compliance and documentation, followed by application and agreement.

Disclaimer

While care is taken to update the information, products, and services included in or available on our website and related platforms/ websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/ service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/ service document and applicable terms and conditions. In case any inconsistencies are observed, please click on reach us.

*Terms and conditions apply

Standard Disclaimer

Investments in the securities market are subject to market risk, read all related documents carefully before investing.

Research Disclaimer

Broking services offered by Bajaj Financial Securities Limited (Bajaj Broking) | REG OFFICE: Bajaj Auto Limited Complex, Mumbai –Pune Road Akurdi Pune 411035. Corp. Office: Bajaj Broking., 1st Floor, Mantri IT Park, Tower B, Unit No 9 &10, Viman Nagar, Pune, Maharashtra 411014. SEBI Registration No.: INZ000218931 | BSE Cash/F&O/CDS (Member ID:6706) | NSE Cash/F&O/CDS (Member ID: 90177) | DP registration No: IN-DP-418-2019 | CDSL DP No.: 12088600 | NSDL DP No. IN304300 | AMFI Registration No.: ARN –163403.

Website: https://www.bajajbroking.in/

Research Services are offered by Bajaj Financial Securities Limited as Research Analyst under SEBI Registration No.: INH000010043.

Details of Compliance Officer: Ms. Kanti Pal (For Broking/DP/Research) | Email: compliance_sec@bajajfinserv.in/ Compliance_dp@bajajfinserv.in | Contact No.: 020-4857 4486 |

This content is for educational purpose only.

Investment in the securities involves risks, investor should consult his own advisors/consultant to determine the merits and risks of investment.

Frequently asked questions

What is the role of a sub-broker?

A sub-broker is a professional who acts as an intermediary between the main broker and the client. They assist clients in various activities such as financial transactions and paperwork. In return for the services rendered by the sub-brokers to the brokers, they receive a certain commission from the transactions done by the clients.

Can sub-brokers trade for themselves?

Yes, sub-brokers can trade for themselves. However, they must comply with the rules and regulations set by the regulatory authorities.

Is being a sub-broker profitable?

Being a sub-broker can be profitable if they provide quality services to their clients and build a strong clientele base. Sub-brokers earn commissions from transactions done by their clients.

What is the salary of a sub-broker?

The salary of a sub-broker varies depending on their experience, skills, and location. Sub-brokers earn commissions from transactions done by their clients.

What is the process of sub-broker?

The process of becoming a sub-broker involves research and education, locating a reputable registered stockbroker, contacting them to initiate the process, compliance and documentation, application and agreement, licensing and registration, training and onboarding, and building clientele.

Show More Show Less