What are the functions of a sub-broker?

Kimono R Pablo

Investing in the stock market can become complex for investors who don’t possess extensive knowledge about the financial market. The Indian stock market provides immense opportunities for multiplying wealth, but without understanding the factors that can affect the stock price, profits can turn into losses. However, you can still […]



Investing in the stock market can become complex for investors who don’t possess extensive knowledge about the financial market. The Indian stock market provides immense opportunities for multiplying wealth, but without understanding the factors that can affect the stock price, profits can turn into losses. However, you can still invest in the stock market through the expertise of an authorised person like a sub-broker.

Who is a sub-broker?

Sub-brokers are authorised people who create a bridge between the investor and the stockbroker. A “sub-broker” is similar to an agent to investors and is not a stock exchange trading participant but assists in dealing with shares on the stockbroker’s behalf. Generally, sub-brokers are investment experts who assist investors by carrying out the transactions, helping in after-sales, and providing them with sound investment advice.

Functions of sub-broker

The role of the sub-broker is vital in the smooth investment process for investors and added business for stockbrokers. The functions of sub-broker are as follows:

The role of sub-broker for the stockbroker


  • Business development: One of the primary functions of a sub-broker is to find new investors. Sub-brokers help the stockbroker to maximise business in the area by adding new customers and helping them invest in the stock market.


  • Document Verification: Sub-brokers work closely with the stockbroker to verify the transaction documents of the clients. It allows stockbrokers to ensure a transparent investment process and avoid financial mistakes in their business process.


  • Quality of deals: For a stockbroker, a quality deal is when the investor has no problems in the investing process, makes recurring investments and feels satisfied with the overall process. Sub-brokers ensure that the stockbrokers are presented in the best light possible and offer their services.


  • Assistance in sales: The sub-broker issues sales notes for every sale made by the customer. It details the date of the transaction, the invested amount and the company name. The assistance allows stockbrokers to cross-check the transaction and mitigate the risk of any mistakes.

The Role of Sub-broker for Customers/Clients


  • Account setup: The sub-broker helps customers in opening their Demat account and verifying other required documents. They also inform them about ways to manage their accounts and monitor investments.


  • Facilizates Investment: One of the main functions of the sub-broker is to facilitate customers to make informed investments. As sub-brokers have extensive knowledge of the capital markets they provide research-based investment recommendations to their customers.


  • Point of contact: The sub-broker is also like a customer service executive. They work as a single point of contact for the customer in case they need assistance with anything related to investments.

SEBI guidelines for sub-brokership


  • A sub-broker is required to seek registration with SEBI in accordance with SEBI (Stock Broker and Sub-Brokers) Regulations, 1992 under SEBI Act, 1992.


  • As per the said Regulations, no sub-broker shall act as such unless he holds a certificate granted by SEBI. As per the present procedure specified under Regulations, the sub-broker is required to make an application under Regulation 11 along with a recommendation letter in Form C from a stockbroker of a recognised Stock Exchange with whom he is to be affiliated.


  • A stockbroker may appoint one or more sub-brokers after obtaining specific prior approval from the concerned stock exchange for each such person. The procedure of appointment of a sub-broker is specified under SEBI Circular MIRSD/Dr-1/Cir-16/09 dated November 06, 2009.


  • Stockbrokers shall select a person in compliance with the criteria laid down by the Exchange for appointment as a sub-broker and forward the application of the person to the stock exchange for approval. On receipt of the aforesaid application, the stock exchange may accord approval on satisfying itself that the person is eligible for appointment as sub-broker, or may refuse approval on satisfying itself that the person is not eligible for appointment.

The sub brokerage franchises in India are increasing daily since many people have recognized that if you are good with numbers, you may have a great opportunity to make money. As sub-brokers are celebrated both by the customers and the stockbrokers, the opportunity is a great way to uplift the standard of living while fulfilling your entrepreneurship desires. IIFL is one of the leading stockbrokers in India and is always looking for skilled sub-brokers. If you are one of them, you can contact IIFL and join the IIFL franchise.

FAQs

Q.1: How do sub-brokers make money?

Ans:
A sub-broker earns through commission for every executed transaction. As they are the point of contact between the clients and the stockbroker, they earn more through a large and high-turnover client base. The higher the investments, the higher their commission. 

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