Sub Brokers / Authorized Person / Sub Broker Franchise Review

A sub broker is an individual who is chosen by a stock broker and performs on behalf of a Trading Member as an agent but he is not a Trading Member of a Stock Exchange. In this article, you will know everything about Sub Brokers / Authorized Person / Stock Broking Franchise or Sub Broker Franchise.

A sub broker is also known as a broking franchise. Sub-brokers are needed to be enumerated with SEBI and the stock broker will be held accountable for all tasks of commission of the authorized person.

Sub broker is also known as the agent of the broker. In a bid to reach out to more people, a broker may contact a sub broker who might enjoy a great client base. Sub brokers are supposed to be registered with the Securities and Exchange Board of India (SEBI). SEBI made it mandatory that no trading member can associate with a sub broker if the sub broker is not listed with it.

In general, a broker can have several sub brokers working on his behalf. There is no restriction on the number of sub brokers that a stockbroker can have.

What does a sub broker do?

An Authorized Person or Sub Broker is a kind of system under which any SEBI registered Stock Broker can deliver its franchise to any firm or individual who is ready to abide by all rules & regulations of SEBI & have an excellent network of investors to perform as a sub broker on behalf of the franchiser.

The Products, Services, Offers, etc. given by the franchisee are the same as offered by the franchiser. Besides this, the Franchisee can also provide additional benefit to their clients which are not offered by the Franchiser. This business follows the brokerage sharing model where the Franchisee usually retains maximum share & franchiser receives low share.

What do you mean by a Share Market Sub Broker or Stock Broker Partner?

A Stock Market Sub broker or Stock broker partner refers to a Franchisee company that managed stock broking franchise from the franchiser.  Some of the leading Stock Broking Franchisers are Angel Broking, Nirmal Bang, Share khan, & others.

The primary job of a Sub broker or partner is to give stock tips or stock recommendations to its clients on the basis of his evaluation of the industry. Some Franchisers also stock recommendations to their sub brokers but a majority of them don’t.

Sub Brokers or partners keep track of their clients & it is their headache to get the trading done from their clients so that they can earn high brokerage.

Different between Brokers and Sub Brokers

There are very minor differences between broker and sub broker, the major difference being, broker is a bigger entity, and a sub broker is a part of that entity that just helps the broker to extend its reach to a larger audience.

Sub Broker Registration Fees

For AP registration: INR 2000 (plus GST) per category

For AP cancellation: INR 1000 (plus GST) per category

In order to become a sub broker, one should have sound knowledge of stock market and its functioning. This is because investors rely on the sub broker to understand the nitty-gritty of the stock market.

Sub Broker Regulations

There has been an alteration made by SEBI to the Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992. These regulations are today known as the Securities and Exchange Board of India (Stock-brokers and Sub-brokers – 2nd Amendment) Regulations 2018.

They have become applicable from 1st April 2019. According to this amendment, SEBI has enabled sub brokers of stock as well as commodity exchanges to carry out commercial activities under one entity now. Earlier, it was allowed to be performed under different companies.

As per the regulations, the sub broker shall be accountable to submit a deceptive or false return percentage values to the stock exchange. They are indebted to duly comply to procedures and file returns on time. More so as per the amendment the word ‘sub broker’ shall be misplaced from different clauses.

FAQs about Sub Brokers