If you are fascinated by the stock market and want to make money by helping others invest in it, you might want to know about sub brokers and sub broker franchise. With us you are at the right place to know all the details about the sub broker. We will look into everything you need to know about sub brokers. Including who they are, what they do, how they earn, and how you can become one.
What Is A Sub Broker?
A sub broker which is now known as an authorized person is an intermediary between investors and stockbrokers. This enables individuals or institutions to invest in the stock market and other financial instruments. They guide investors to buy and sell shares. They play the role of advisors. This helps them make informed investment decisions. Authorized persons also guide various investment options such as mutual funds, derivatives, and commodities.
To become an authorized person, one doesn’t need higher education qualifications or extensive experience, but dedication and zeal for success are beneficial. The authorized person acts as an agent for a stock broker. They bring in new clients, and they are entitled to a share of the profits made by the broker in exchange for introducing new customers. They are required to obtain a certificate of registration from SEBI and agree with the broker, as specified by SEBI.
Role Of Sub Broker
A sub-broker helps the investor to open an account, access the trading platform, place orders, execute trades, and provide advisory services. A sub-broker also helps the investor to understand the market trends, news, events, opportunities, and risks. A sub-broker earns money by getting a share of the brokerage fee that the investor pays to the stockbroker. A sub-broker works under the supervision of a stockbroker and has to follow the rules and regulations of SEBI and the stock exchange. A sub-broker also has to maintain a high level of professionalism and ethics while dealing with the investor.
How Is A Sub Broker Different From A Stock Broker? (Sub Broker Vs Stock Broker)
The table below shows the difference between a sub broker and a stock broker.
|Aspect||Sub broker (Authorized person)||Stock broker|
|Roles played||Acts as an intermediary between the client and the stock broker. Facilitates client access to various services. May provide additional services.||Operates independently. Provides infrastructure for investors to invest in companies. Can also play a role of depository participant.|
|Registration||Registered with the respective stock exchange and the broker they are associated with. Not directly registered with SEBI.||Registered with SEBI, the depository, and the stock exchanges.|
|Revenue sharing||Helps stock brokers expand business by connecting them to clients. Receives a share of the revenue generated by the stock broker for the clients they bring in. May earn revenue through additional services.||Earns revenue primarily through brokerage fees charged for executing trades on behalf of investors. Does not share revenue with sub brokers or authorized persons.|
What Is A Sub Broker Franchise?
A Sub broker franchise is a business arrangement in the stock market. In this a stockbroker allows individuals or entities to own and operate a branch or outlet under their brand name. The franchisee, in this case, is the sub-broker who sells the services of the stockbroker to clients in a particular territory.
The franchise model exists because stockbrokers cannot establish a physical presence in every city or location across the country. Instead, they set up predefined infrastructure and territorial criteria to expand their reach. The territorial criteria ensure that each sub-broker can have only one franchise in a specific territory, enabling them to gain more visibility and serve clients in that area effectively.
Sub Broker Franchises offer a range of services to clients, including account opening assistance, trading terminals, call and trade services, issue resolution, and other related support. This model provides convenience to investors as they can access the services of the stock broker through a local presence in their area.
With the advent of online stock broking in India, the traditional franchise model has evolved. Many sub-brokers have transitioned to online sub-broking models, where they partner with stock market educators or online platforms. These online sub-brokers educate their students about trading and encourage them to open trading accounts with the partnered broker, offering a more efficient and digital approach to sub-brokership.
Top 10 Sub Broker Franchise With Top Brand Value
- Angel Broking Franchise: Angel Broking offers a high revenue share with certain sub-brokers getting up to 90%. They have a long-standing presence and provide excellent trading platforms and apps.
- Sharekhan Franchise: Sharekhan offers a range of flexible revenue-sharing options and requires a minimum security deposit of Rs. 70,000. They have a well-established brand and provide reliable trading terminals and apps.
- Motilal Oswal Franchise: Motilal Oswal, with over three decades of experience, provides a high revenue share and has a maximum security deposit requirement of Rs. 3 lakhs. They offer advanced trading platforms and applications.
- Kotak Securities Franchise: Kotak Securities offers attractive revenue-sharing options and requires a minimum security deposit of Rs. 1 lakh. They have a strong presence and provide excellent trading platforms.
- Karvy Franchise: Karvy boasts more than three decades of experience and provides a minimum revenue share of 60%. They have a low minimum security deposit requirement of Rs. 50,000 and offer both flat and flexible revenue-sharing options.
- Edelweiss Franchise: Edelweiss offers a revenue share starting from 55% and going up to 70%. They have a well-established presence and provide reliable trading platforms and apps.
- ICICI Direct Franchise: ICICI Direct shares up to 75% of the revenue with sub-brokers and offers a range of trading platforms. With a strong brand value, they also have a long-standing presence in the market.
- India Infoline Franchise: India Infoline offers attractive revenue-sharing opportunities and has a well-designed trading platform. India Infoline franchise has a prominent place in the stock market.
- SMC Global Franchise: SMC Global provides a high revenue share of 75% and requires a minimum security deposit of Rs. 50,000. They offer a range of trading platforms and apps.
- Axis Direct Franchise: Axis Direct offers competitive revenue-sharing options and requires a minimum security deposit of Rs. 1 lakh. They provide reliable trading platforms.
In conclusion, understanding the role and significance of sub brokers in the stock market is crucial for both investors and aspiring entrepreneurs. Sub brokers play a vital role in facilitating seamless access to the stock market for investors. They provide essential services and guide investors in making informed investment decisions.
The sub broker Franchise model has been a game-changer as it allows stock brokers to expand their reach across various territories in the country. Investors benefit from local representation and personalized services offered by sub brokers, while brokers can focus on providing the infrastructure and support necessary for successful trading.
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Qu1. What are some of the benefits of becoming a sub-broker?
Ans. Sub-brokers earn commissions from the stockbroker based on the number of clients they handle, allowing for potential income growth.
Qu2. What are the minimum criteria to become an authorized person?
Ans. To become an authorized person, you should be at least 18 years old. Along with this, you need education proof (10th pass), a valid PAN card, residence proof, bank proof, and a photo ID like PAN or Aadhar card.
Qu3. Who can appoint a sub-broker?
Ans. A stockbroker can appoint a sub-broker to represent them and deal with clients on their behalf.
Qu4. What is the initial cost to be a sub-broker?
Ans. Becoming a sub-broker may require depositing a sum with the stockbroker, and additional registration charges for specific segments as per the exchange requirements (e.g., NSE Cash, BSE Cash, etc.).