How To Become A Sub Broker?

The Indian stock market has witnessed a meteoric rise in popularity, with millions of retail individuals opening Demat accounts. However, direct trading with stock exchanges is not permissible for both retail and institutional investors. Instead, they must establish a relationship with a stockbroker and open a Demat account to participate in the secondary market. To cater to the growing demand and expanding client base, the concept of sub-brokers has emerged. Sub-brokers play a crucial role in assisting customers with account opening procedures and investment decisions. 

In this blog, we will provide an in-depth understanding of who a sub-broker is, the benefits of being one, and a step-by-step guide on how to become a sub-broker in India. 
 

What is an how to become a sub broker?

To understand how to become a sub broker, it is essential to grasp the role and function of a sub-broker itself. As defined by the National Stock Exchange, a sub-broker acts as an intermediary between a Trading Member (stockbroking firm) and the client. Unlike a stockbroker, who connects investors directly to the stock exchange, a sub-broker facilitates transactions and communication between the stockbroker and the investor.

Achieving the status of a sub-broker requires specific steps and qualifications. Aspiring individuals should seek in-depth knowledge of the financial industry, market trends, and relevant regulations. Completing appropriate educational courses or training programs can help in gaining the necessary expertise.

Obtaining the required licenses and certifications is paramount. These credentials not only ensure adherence to regulatory guidelines but also establish credibility with potential clients.

Moreover, building a strong professional network and fostering trust among clients are crucial aspects of becoming a successful sub-broker. Effective communication and interpersonal skills enable seamless mediation between the broker and the client.
 

Role and Responsibilities Sub Broker

Now that you have gained insights into how to become a sub broker in stock market, let's explore the roles and responsibilities that come with this profession.

1. Client Acquisition
Sub-brokers are responsible for identifying and acquiring potential clients interested in trading or investments. They pitch the benefits of their brokerage house, understand clients' financial goals, and convince them to open an account.

2. Client Activation
Sub-brokers play a crucial role in guiding and supporting clients to start their trading activities. They provide training sessions, assist with platform navigation, and ensure clients are ready to begin trading.

3. Client Servicing
Sub-brokers provide ongoing support to clients, offering trading calls, resolving transaction-related issues, and ensuring client satisfaction. They strive to deliver high-quality services and retain clients through exceptional support.

4. Stock Tips & Calls
Sub-brokers often offer investment ideas, suggestions, and tips to clients, adding value to their trading decisions and fostering client loyalty.

5. Compliance with Regulatory Rules
Sub-brokers adhere to the rules and regulations set by stock exchanges and regulatory bodies, verifying client details, assisting with documentation, and ensuring compliance with KYC requirements.

6. Research & Analysis
Sub-brokers conduct independent research and analysis to provide valuable insights to clients, helping them make informed investment decisions.

7. Account Opening Assistance
Sub-brokers assist clients in opening trading accounts, providing guidance and ensuring a smooth account opening process.

8. Order Execution Support
Sub-brokers execute client orders accurately and efficiently, acting as dealers or terminal operators when requested.
 

Step By Step Guide to Become a Sub Broker?

Here is a step-by-step guide on how to become a sub-broker in India, outlining the detailed process and requirements to embark on this journey in the financial industry.

1. Choose the Right Sub-Broker Franchise Model
Begin by researching and evaluating various sub-broker franchise models offered by different stockbroking houses. Carefully examine their business models and select the one that best suits your preferences and goals.

2. Check Eligibility Criteria
Once you have chosen a sub-broker franchise model, review the eligibility criteria set by the stockbroking house. Generally, the criteria for individuals are straightforward and easily met.

3. Prepare and Submit Documents
Once you are confident that you meet the eligibility criteria, gather all the necessary documents. These typically include:

● Sub-broker registration application form
● Signed agreement between the stockbroking house and the sub-broker
● Proof of address (e.g., telephone bill, electricity bill, ration card, passport, etc.)
● Proof of experience certificate (if applicable)
● Any other relevant documents as required
● Pay Processing Fee: Along with the submission of documents, you will need to remit a processing fee of Rs. 2,000 plus GST to the stockbroking house.

4. Application Submission and Payment
Once the stockbroker receives your documents and processing fee, they will electronically forward your application to the exchange and make the payment for processing the sub-broker application form on your behalf.

5. Document Scrutiny
The exchange will thoroughly scrutinize the submitted documents to ensure there are no deficiencies. If any issues or deficiencies are identified, the exchange will return the application form and documents to the stockbroking house for correction and subsequent re-submission.

6. SEBI Registration Fees
Once the application form receives the exchange's approval, you will need to submit the necessary SEBI registration fees to the stockbroking house. The stockbroker, acting on your behalf, will then remit the fees to the exchange. This step ensures compliance with SEBI regulations and finalizes your registration as a sub-broker.

7. Sub-Broker Registration Certificate
After the receipt of the SEBI registration fees, you will be issued a sub-broker registration certificate from SEBI, along with a unique registration number. This certificate officially recognizes you as a sub-broker and authorizes you to operate in the stock market.

By following the above step-by-step procedure, you can navigate the process of how to become a sub broker with ease.
 

Benefits of Being a Sub-Broker

Here is an exploration of the benefits of being a sub-broker, highlighting the advantages and growth opportunities associated with this role:

● Financial Knowledge

Being a sub-broker or part of a sub-broker franchise offers a significant benefit in terms of gaining financial knowledge. Working under a broker provides sub-brokers with valuable insights and information about the stock market. This knowledge enhances their understanding of market dynamics and enables them to make informed decisions for their personal trades. Although sub-brokers do not have the authority to act as brokers, they retain the ability to engage in personal trading activities with any broker by utilizing their own funds. This self-sufficiency empowers sub-brokers to serve their clients better and fuel their own investment journey.

● Added Services

Another advantage of being a sub-broker is the potential to provide customers with services beyond investment tips and strategies. Some brokerage firms allow sub-brokers to offer additional services such as mutual fund distribution and loan options to clients. By expanding their service offerings, sub-brokers can earn commissions from these auxiliary services, thereby boosting their income and fostering the growth of their sub-broker franchise.

● Low Investment Amount

One of the major benefits of becoming a sub-broker is the low investment requirement. Unlike other financial ventures, sub-brokers do not need a substantial capital amount to get started. The majority of expenses are taken care of by the franchiser. Sub-brokers only need to invest a small amount, such as 10,000 rupees or more, to initiate their journey as a sub-broker. Regardless of the initial investment, sub-brokers have the potential to earn unlimited commissions based on their clients' transactions, without any limitations.
 

Conclusion

Becoming a sub-broker in India offers a promising pathway to enter the dynamic world of the stock market. Through this step-by-step guide, we have explored the process and requirements involved in becoming a sub-broker. From choosing the right sub-broker franchise model to submitting the necessary documents and fees, aspiring individuals can embark on their journey towards establishing a successful sub-brokerage business.