If you are evaluating sub-broker vs own brokerage, the real decision is about responsibility and operating depth, not only income. An authorised partner route usually suits people who want to start faster under a recognised broker’s framework, while a full brokerage route suits those who want end-to-end control and can manage heavier compliance and infrastructure. This guide explains how each option works, where the obligations sit, and what to verify before committing.
What Is An Authorised Partner Program?
- An Authorised Person (AP) is appointed by a stock broker (trading member) and acts as an agent of that broker to provide access to the exchange trading platform.
- In practice, an authorised partner operates under the parent broker’s brand and license framework, with a formal agreement that defines scope, responsibilities, commission sharing, and termination terms.
- Since the trading member remains responsible for the acts of the authorised person, the compliance responsibility is anchored with the broker, even though the partner drives local business development.
Benefits & Limitations Of An Authorised Person
Benefits:
- Faster market entry: You start under an existing trading member’s framework rather than building a broker membership from the ground up.
- Defined operating boundaries: AP conditions typically restrict handling of funds/securities in the AP’s own name and prevent direct charging of clients, which reduces certain operational risks.
- Clear support expectations: Many broker-led programs include platform access, training, and operational support as part of the partner enablement.
- Easier scalability for small teams: Some partner programs position themselves as workable even for solo operators, depending on the broker’s support model.
Limitations :
- Lower control: You must work within the broker’s policies, product scope, and operating rules defined in the agreement.
- Dependence on the parent broker: Service quality, technology experience, and turnaround times are influenced by the broker’s central teams.
- Exclusivity constraints: An AP cannot be appointed by more than one trading member at the same time.
- Commercial trade-off: Earnings are usually structured as a revenue/commission share with the broker, so your net payout depends on the agreed split.
IIFL Capital Services Ltd promotes a partner model highlighting higher revenue share, 24/7 business support, a diverse product suite, and access to technology tools. Partners receive training and marketing support (including digital marketing assistance and participation in seminars/events).
What Does “Starting Your Own Brokerage” Involve?
- Starting your own brokerage generally means becoming a registered stock broker and meeting exchange membership requirements, instead of operating as an appointed agent under another broker.
- SEBI requires that a stock broker should not buy, sell, or deal in securities unless they have a certificate of registration from SEBI, under the conditions of that registration.
- In addition, you typically need to obtain membership with a recognised stock exchange and meet its eligibility, experience, and capital-related requirements (these vary by entity type and segment).
- This is where the own brokerage setup becomes materially different from an AP route: you must plan for governance, net worth/capital, exchange deposits, compliance staffing, audits, and ongoing regulatory reporting as a principal business owner.
Benefits & Limitations Of Starting Your Own Brokerage
Benefits:
- Maximum control: You define your operating model, service standards, and internal processes end to end.
- Direct market position: You operate as the broker rather than as an agent appointed by a trading member.
- Custom scale strategy: You decide your team structure, branches, and client servicing model based on your growth plan.
- Long-term asset building: You build your own brand equity and organisational value over time.
Limitations:
- Higher regulatory and membership load: You must meet SEBI registration expectations and exchange membership eligibility norms as an entity.
- Higher fixed costs: Compliance, infrastructure, and audits can become recurring expenses that must be supported through consistent revenue.
- Longer time to launch: Approvals, documentation, and operational readiness can extend timelines compared with an appointed partner route.
- Execution risk sits with you: Technology reliability, data security, and internal controls become your direct accountability.
Conclusion
The sub broker business model (legally defined as an authorised person) is usually the better fit when your priority is faster start-up, structured support, and operating under an established broker’s framework.
Starting your own brokerage is the better fit when you are prepared to carry the full regulatory, membership, and operational responsibility that comes with being the broker entity. Before you decide, ask for written clarity on role scope, revenue sharing, compliance expectations, and the exact tasks handled by the parent broker versus the partner.
