How to Become a Sub-broker?

A sub-broker (currently known as Authorised Partner) is a promising independent venture for all those interested in the finance sector. Being a sub-broker actually means you’re collaborating with a well-established brokerage firm that lets you offer trading services to clients using their brand, platform, and support. This career allows one to create his or her client base, expand financial knowledge, and get hold of significant earning potential in commissions. Dive into this informative guide to understand how to become a broker in the stock market.

What Is a Sub-broker Franchise?

A sub-broker franchise is a business where an entity or person enters into a partnership with a brokerage firm. They then present investment services under the parent company’s umbrella. The clients will be able to link up with the trading platform, resources, and skills of the brokerage firm with the help of the sub-broker..

The profession of Sub-broking

Sub-broking is the act of being a sub-broker to a brokerage by acting as a local representative. The profession of sub-brokership bridges the gap between clients and the overall financial markets. Sub-brokers offer advisory services tailored to clients, facilitate trading, and build client relationships, thereby offering a supportive role in clients’ investment journey.

Sub-brokers, with client management skills and market expertise, play a pivotal role in enhancing accessibility to trading services. This profession is relatively very flexible, offering great potential earnings based on commissions from the activities of trading clients, which is a valuable path in finance entrepreneurship.

Eligibility to Become a Sub-broker

One of the most vital factors in the process of how to become a sub-broker in the stock market is to know the required qualifications to be eligible. Although the eligibility criteria for sub-brokers differ with every brokerage firm, the basic qualification requirement remains the same. They are listed below:

• The person should have completed secondary studies (10+2) as per SEBI’s regulations. However, the higher the studies, the better chances of a successful sub-broking business.
• Must have basic knowledge of the financial markets, such as the Demat account, trading account, the stocks’ buying and selling process etc along with knowledge about financial transactions.
• 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.
• Good communication skills are an added trait as people skills are required to onboard clients and add them to the online brokerage business.

Steps to Become a Sub-broker

Becoming a sub-broker is not that difficult. Below are the details to be followed:

1. Select a model that suits your sub-broker franchise

To get started, you must research and assess the various available sub-broker franchise models stock brokers offer. Review the business models of all those franchises and choose the most appropriate one according to your requirements and goals.

2. Qualification criteria

Review the eligibility criteria after you have selected a franchise model.

3. Document requirements

Gather all the documents, including:

• Form of application for Sub-broker registration
• Agreement between a Stock broking firm
• Documentary proof of address (a telephone bill/ electricity bill/ ration card/ passport)
• The processing fee of ₹2,000 plus GST should be paid to the stock broking house along with the documents.

4. Application submission and payment

Once you send your documents and processing fee, the stock broker should electronically send the ‘Exchange Your Request for a Sub-broker’ form that will be processed on your behalf so they can make an advance payment.

5. Document scrutiny

The exchange will carefully scrutinize the provided documents. The exchange shall forward the application form and documents to the stock broker for correction and subsequent resubmission upon identifying any issues or deficiencies.

6. SEBI registration fees

After the exchange approves your application forms, you have to pay relevant registration fees for SEBI’s stock broking house. A stock broker, on your behalf, will pay the fees to an exchange. This is how you are registered as a sub-broker also known as authorised partner and comply with the SEBI Regulations. On receipt of the registration fees, SEBI will issue you a sub-broker’s certificate and a unique registration number. The sub-broker’s certificate would be an official recognition, making you an intermediary authorized to trade in the stock market.

Responsibilities of a Sub-Broker

The process of becoming a sub-broker is not crucial. But, it is equally important to understand the responsibilities.

• • Client Acquisitions: Marketing, networking, and outreach are performed to attract prospective investors.
  • Advisory Services: Personalised investment advice and market insights needs to be provided to the clients.
  • Trade Execution: Client trade execution on the brokerage’s platform will be allowed.
  • Customer Support: The client queries need to be replied to with ongoing help for trading needs.
  • Regulatory Compliance: All transactions are done according to suitable regulations to ensure compliance.
  • Market Analysis: The latest news, market trends, and trade opportunities need to be communicated to the clients.
  • Relationship Management: Developing relationships with clients to maintain a long-term engagement
  • Training and Development: Up-to-date knowledge concerning finances to serve the client better.

Difference Between Broker And Sub Broker

Criteria	Broker	Sub-Broker
License	Requires a full brokerage license	Works under the license of a brokerage firm
Direct Trading Access	Provides direct market access to clients	Assists clients in accessing the brokerage’s platform
Client Ownership	Owns client relationships and handles compliance	Manages clients but relies on the brokerage’s systems
Responsibilities	Full responsibility for trading services offered	Focuses on client service and local outreach
Revenue Source	Earns directly from trading fees	Receives commissions from the brokerage’s fees

Documents Required to Become a Sub Broker

• Proof of Identity: PAN card, passport, or Aadhar card for identity verification.
• Proof of Address: Utility bills, bank statements, or other government-approved documents.
• Educational Certificates: Proof of minimum qualification, usually a 10+2 certificate.
• Bank Account Details: A canceled cheque or bank statement for linking payments.
• SEBI Registration (if required): Documents related to any prior SEBI registration.
• Photographs: Recent passport-sized photographs for documentation purposes.
• Franchise Agreement: Signed agreement with the brokerage firm for partnership.

Conclusion

Now that you know how to become a sub-broker in India, you can go ahead and choose a profession that can allow you good earnings through commissions.

IIFL offers one of the best sub-broker franchise models in the entire Indian stockbroking scene. A strong brand name, an intuitive tab-based advisory platform, cutting-edge trading platforms, and best in class research reports are some of the unique features that you get to experience by partnering with IIFL.

By choosing IIFL Securities as a business partner, you also get to enjoy several other benefits, such as a high revenue-sharing model, personal assistance, personalised branding, investor awareness programs, and access to a robust back-office infrastructure and risk management systems. As a sub-broker / authorised partner with IIFL Securities, you also get access to an extensive product range that includes not only equities and mutual funds but also NCDs, bonds, and other insurance products..

 

Q.1: How much can a sub-broker earn in India?

 

Ans: As sub-brokers are not trading members, they can not charge a brokerage. However, they are given a commission on the total transaction value done by their clients. There is no cap on the amount of commission a sub-broker can earn.

 

Q.2: Can I still trade after becoming a sub-broker?

 

Ans: Yes, you can trade through your Demat account and own capital and realise profits like a normal retail investor.

 

Q.3: Where should I apply to become a sub-broker?

 

Ans: You can apply for getting a certificate from the National Institute of Securities Market (NISM). You will have to clear an exam including modules such as equities, commodities, mutual funds etc.

Q.4: Is an Authorised Partner a good career?

Ans: For those having adequate knowledge of the financial market and client management, a sub-broker or authorised partner career may turn out to be rewarding as it can provide high earnings through commission, flexibility in operations, and scope to garner perennial relationships with clients.