What is the Eligibility Criteria For Sub-broker?
Investing in the stock market has always been considered a preferred strategy for risk aggressive investors and institutional investors. However, in recent years, the number of retail investors in India has also seen a steep rise. This was further amplified by the effects of the COVID-19 pandemic. In fact, the share of non-institutional (or retail) investors in the cash segment attained a decade high of 68% in June 2020.
All of these developments have together created an increase in demand and new avenues of opportunities in the industry for investors. And consequently, this has also resulted in a rise in demand for financial and ancillary services in the investment sector. Dozens of broking houses have emerged in recent years, and their Sub-broker Business Model has transitioned from tradition to flat discount brokerage. With an unprecedented rise in the number of Demat accounts, people’s need for assistance on how to invest in the stock market has also risen considering new online trading platforms and their features. Hence, the role of a sub-broker has become critical in the financial market. However, those who want to become sub-brokers understand very little about sub-broker qualifications, sub-broker eligibility, and more, to earn good commissions.
Who is a Sub-broker?
According to the definition on the National Stock Exchange, a sub-broker acts on behalf of a Trading Member (a stockbroking firm) as an agent. They function similar to a broker but work as the middle man between two parties; the customer and the main broker. While a stockbroker is the middle man between an investor and the stock exchange, a sub-broker (Authorised person) is the middle man between the stockbroker and the investor. The job of a sub-broker is to mediate between the broker and client and assist the client in various activities such as financial transactions and paperwork.
Role of Sub-brokers
In the rush of investors flooding the markets, it’s not only the broking houses who have their schedules full and busy but the sub-brokers who join the industry after understanding the sub-broker criteria. The role of sub-brokers in keeping the investment ecosystem in place has also gained more prominence. Also known as authorised persons (APs), in some cases, sub-brokers act as the middlemen between stockbrokers and investors. Aspiring entrepreneurs and businesses can venture into the sub-broking field and act as the connecting agents between investors and brokers after knowing sub-broker eligibility criteria. However, one must deeply understand the nature of the responsibilities taken by sub-brokers.
Responsibilities of sub-brokers
After a person becomes a sub-broker after clearing eligibility criteria for a sub-broker, numerous financial responsibilities follow. A sub-broker essentially acts on behalf of a registered trading member or stockbroker and helps investors deal with securities and financial assets. If you have a fair bit of knowledge about the financial markets, and fulfil the stock-broker qualifications in India and if you’re passionate about investing in financial assets like stocks and securities, it may be a good idea to consider venturing into the sub broking business.
If you’ve already been thinking over this, you’re perhaps wondering how to go about this. Well, to begin with, you need to be aware of the eligibility criteria for sub-brokers along with the needed qualification. Once you know the sub-broker qualification in India details, you’ll be in a better position to evaluate if that’s a course of action that you can pursue.
So, without further ado, let’s get into the details of the sub-broker eligibility criteria:
Sub-broker Eligibility Criteria
The exact stock-broker qualifications may vary depending on the trading member you wish to partner with. Broadly speaking; however, these are some of the needed qualifications that you must fulfil or possess to fulfil the eligibility criteria:
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The person should have completed secondary studies (10+2) as per SEBI’s regulations. However, the higher the qualifications, the better chances of a successful sub-broking business.
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They must have basic knowledge of the financial markets, such as the Demat account, trading account, the stocks’ buying and selling process, etc and knowledge about financial transactions.
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They must have technical knowledge on how to operate computers and basic software such as Excel. Furthermore, the technical knowledge of managing online trading platforms is a must.
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Good communication skills are an added characteristic as people skills are required to onboard clients and add them to the online brokerage business.
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The person should be of 21 years of age and should not be a trading member of the stock exchange.
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The person should not be a registered sub-broker with any other trading member and should not be a shareholder or partner of a registered sub-broker.
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The person should not be a defaulter in any other stock exchange and should not have any criminal or fraud case pending.
Other Sub-broker Qualifications
Aside from the eligibility criteria mentioned above, there are some other qualifications that it is preferable to have. Here’s a closer look at some of them.
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Good Knowledge of the Financial Markets
This comes in handy when you need to advise clients about their investment strategies. It’s important that you recommend investments that are suited to the risk and return profile of the investor.
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Knowledge of the Economy
Merely knowing how the markets function is not enough. You need to also learn more about the events and influencers that affect the economy, since they will also impact the financial market.
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Persuasiveness
Since stock broking is a very competitive business, it can help if you are persuasive by nature, so you can encourage investors to choose the trading member you’ve partnered with and to engage with you as their preferred advisor.
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Awareness of International Markets
Moving beyond the financial markets and the national economy, sub-brokers also need to have up-to-date knowledge of international happenings since they can influence how the Indian markets move as well.
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Computer Literacy
Stock broker qualifications also require that you be literate in computers and technology since you would need to help investors trade electronically on the stock markets.
Conclusion
Sub broking is a lucrative business, particularly for people who are interested in the financial markets and for people passionate about investing. Today, many of the leading stock broking houses in the country offer their own sub broking and partnership programs for people interested in becoming sub-brokers. The only factor is to fulfil the eligibility criteria for sub-brokers along with having stock-broker qualifications. This field is also highly suitable for millennials who wish to become entrepreneurs, start their own business and work from anywhere, at any time. It can also help professionals, as well as homemakers, expand their scope of work and hone their expertise in this field.
If you’re interested in venturing into this area, make sure you’re aware of the sub-broker eligibility criteria and the qualifications set by the trading member you intend to partner with. You can consider partnering with reputed firms like IIFL as a sub-broker.
FAQs on Eligibility Criteria for Sub-broker
Ans: The documents required to fulfil the eligibility criteria are:
- Latest telephone bill
- Latest electricity bill
- Valid ration card
- Valid passport
- Valid driving licence
- Bank statement of the previous month
Ans: If you have experience in the finance segment and a client base to start with, then you are good to go! To become a financial advisor with IIFL, you need to have a few basic documents and experience in finance. IIFL makes sure that the process of becoming a sub-broker is smooth and hassle-free for you. All you have to do is submit your details in the form on the sub-broker IIFL page. An IIFL representative will call you and take the procedure ahead.
Ans: IIFL offers upto 70% brokerage share, which is the highest in the industry.
