A sub-broker is an authorised person who acts as an intermediary between a stockbroker and a client. Sub-brokers help clients in the process of buying and selling securities. The client services provided by them are investment advice, research reports, and portfolio management. They are not direct members of the stock exchange. Sub brokers provide services to both clients and main brokers and receive commissions in return. This article will explore everything about sub-brokers, their benefits, how they work, and a lot more.
Definition of Sub Broker
A sub-broker is a representative of a brokerage firm or stockbroker. They act as an intermediary between stockbrokers and individual investors. They help in client acquisitions, facilitating trades, and providing investment advice. They play an important role in expanding the broker’s reach and offer personalised advice to them.
Benefits of Becoming a Sub Broker
Sub broking is a lucrative opportunity for individuals looking to enter the financial markets and assist clients with investment and trading services. The following are the benefits of becoming a sub broker:
- Low Initial Investment
To become a sub broker you don’t need that much capital. This makes it ideal for anyone willing to venture into the securities business without a big capital investment. - Income Potential
Sub-brokers make their revenues through the commissions they collect from their customers who are served in the trading of securities and other services. As can be expected, the income flow of sub-brokers significantly depends on the groups of clients the providers of such services have and the number of trades they make. - Flexibility
Sub-brokers primarily operate on their own, or at best own small brokerage houses. This makes them free to conduct business according to their timetable; they still get to enjoy various special privileges offered by the primary broker. - Brand Support
By partnering with a reputable brokerage firm, sub-brokers can leverage the brand’s reputation, resources, and advanced trading platforms to attract clients and enhance their services. - Training and Development
Many brokerage firms offer training programs to help sub-brokers understand the market and improve their skills in advising clients. This enhances their credibility and effectiveness as investment advisors.
Steps to Become a Sub Broker
Becoming a sub-broker involves certain regulatory procedures and criteria set by stock exchanges and the Securities and Exchange Board of India (SEBI). Here are the essential steps to becoming a sub-broker:
1. Understand the Eligibility Criteria
- To become a sub-broker an individual must be at least 18 years old and have a minimum educational qualification of 10+2 or equivalent.
- They must have a basic understanding of the stock market and financial products.
- Having prior experience in financial markets or working as an investor would be a great opportunity.
2. Register with SEBI
- SEBI regulates sub-brokers in India. To become a certified sub-broker, you must be registered with SEBI. This ensures you meet the necessary regulatory and legal requirements.
- To register, you must fill out the registration form and submit it along with the required documents, such as proof of identity, educational qualifications, and financial statements.
3. Choose a Stockbroker to Partner With
- As a sub-broker, you will need to partner with a main stockbroker or brokerage firm. Choose a broker with a strong reputation and a robust trading platform.
- The stockbroker will provide the necessary infrastructure, training, and trading tools. They will also offer you a commission structure based on the services you provide.
4. Complete the Training Program
- Many brokers offer training to sub-brokers. It is essential to complete this training, as it helps you understand the tools, systems, and trading strategies that you will use while advising clients.
5. Sign the Agreement
- Once you have chosen a broker, you must sign an agreement that outlines the terms and conditions of your relationship with them. This agreement will specify commission rates, services provided, and other responsibilities.
6. Obtain a Sub Broker Certificate
- After completing the necessary paperwork and training, you will be issued a sub-broker certificate by the stockbroker. This certificate validates your role as an intermediary between the stockbroker and the clients.
Conclusion
Sub-broker is a good business fit for those interested in the stock market and who need to earn a living through helping their clients in the financial markets. Sub-brokers easily enter the stock market with low capital; the possibility of high income; and gratitude for experience from brokers, therefore, increase income by offering their clients a necessary range of services. Before proceeding to becoming a sub-broker then make sure you know how legal and regulatory framework and find a proper stock broker to register yourself to enter the securities trading world. Additionally, ensure you download essential tools like a Demat App to simplify your investment process and enhance your trading experience.
