Sub Brokers / Authorized Person / Sub Broker Franchise – A Review
In this article, one gets to know in detail about Sub Brokers / Authorized Person / Stock Broking Franchise or Sub Broker Franchise. We will check the following things in detail like –
- What is the role of an Authorized Person or a Sub Broker?
- Benefits of Becoming a Sub Broker of Authorized Person?
- Eligibility Criteria of Becoming a Sub Broker
- How to become an Authorized Person?
- Sub Broker / Authorized Person FAQs
- & much more
Read the entire article to know everything about authorized person or sub broker. Also, fill up the form to Become an Authorized Person of your favorite Stock Broker.
What is the role of an Authorized Person & Franchise or Sub Broker?
An Authorized Person or Sub Broker is a concept where any SEBI registered Stock Broker can provide its franchise to any company or person who is willing to follow all rules & regulations of SEBI & have good network of investors to act as a sub broker on behalf of the franchiser.
The Products, Services, Offers etc. served by the franchisee are same as offered by the franchiser.
Not only this, the Franchisee can also provide extra benefit to their clients which are not offered by the Franchiser.
This business works as brokerage sharing model where the Franchisee generally keeps maximum share & franchiser gets low share.
Who is a Share Market Sub Broker or Stock Broker Partner?
A Stock Market Sub broker or Stock broker partner is a Franchisee company who takes stock broking franchise from the franchiser.
Some of the major Stock Broking Franchiser is Angel Broking, Sharekhan, Nirmal Bang & others.
The Sub broker or partner provides stock tips or stock recommendations to its clients based on his assessment of the industry.
Some Franchiser provides stock recommendations to their sub brokers but most of them don’t.
Sub Brokers or partners keeps track of their clients & it is their headache to get the trading done from their clients so that they can earn high brokerage.
Benefits of becoming a Sub Broker Franchise or Authorised Person
Here are the major benefits of becoming a Sub Broker –
High Revenue Share
The Sub Broker or Partner keeps high percentage of the brokerage generated by the clients; the franchiser gets low brokerage percentage.
Low Investment Business
A Stock Broking Franchise business can be started with minimum Rs.10,000 investment amount, only a security deposit is paid to the franchiser rest all expenses in incurred by the franchiser.
In some cases the franchiser doesn’t even ask for a minimum deposit.
Marketing & Training Support
The franchiser being a large organization also help the sub broker with all sorts of marketing support like providing banners, leaflets, hoardings for their branches.
They also organize seminars for their broking partners to train them on various aspect of the business.
Some Franchiser also provides Advisory, stock tips & recommendations to their sub brokers to help support their client & increase revenue.
Product, Service & Offers
Any new product, services & offers launched by the franchiser can also be availed by the sub broker. This helps the sub broker to keep engaging their client with new things.
What is a Sub Broker or Broking Franchise?
Stock Broking franchise is one of the methods for locally distributing the products and services to its clients through this chain of franchise.
This helps the clients in that area by providing all the information about products and services in all the segments like equity, currency, commodity, future and options, etc.
A “Sub broker” is an agent who sets the investors and he is not a trading member of stock exchange but helps them on their behalf for dealing into securities.
Hence, the Sub-broker agreement is a three partied agreement among the stockbroker, sub-broker and the client.
The sub-brokers are registered with SEBI after clearing the certification exam and they also follow the same rules and instructions.
It is mandatory that all franchise holders must clear the certification exam for registration.
This registration certificate provided by SEBI is important for getting the permit to deal in securities.
Also, SEBI has passed a rule that the trading members will only deal with the person who is registered with SEBI. There are two types of people in a franchise system.
The one who lends his company name and business is called the “franchisor” and the one who pays royalty as the revenue sharing from the brokerage generated, is called the “franchisee”.
The franchise also has to pay and initial fees as security deposit that gives the franchise a right to do the business under the stock broking house name, brand and system.
So, there is an agreement or contract signed between the two parties, which is known as “franchise agreement”.
In this agreement, the franchisee has to follow all the rules and regulations, all the protocols and the business ethics of the company.
The franchisee should also maintain the brand and standard of the company. Otherwise, the franchisor has all the rights to cancel the agreement at any period of time.
How does a Sub Broker Income gets Calculated?
The Sub Brokers Income gets calculated based on revenue sharing model it strikes with the Broking house.
The Sub Broker generally gets higher income compared to broking house. The revenue sharing starts from 50% & can go upto 90% in some cases.
How long does it take to become a Stock Broking franchisee?
The process of becoming a franchisee is very simple.
For lending a franchise, the franchise manager of the broking house meets the client who is opting to take the franchise and tell him all the rules and regulations about the company.
He talks about the charges and the procedure. Generally, it takes 15 to 20 working days for the franchise agreement to complete.
List Best Stock Broking Franchise in India
|Zerodha Franchise||Angel Broking Franchise||Sharekhan Franchise|
|ICICI Direct Franchise||Kotak Securities Franchise||5Paisa Franchise|
|HDFC Securities Franchise||Edelweiss Franchise||IIFL Franchise|
|SMC Franchise||Nirmal Bang Franchise||Asit C Mehta Franchise|
|Shriram Insight Franchise||Motilal Oswal Franchise||ASE Capital Markets Franchise|
|Prabhudas Lilladher Franchise||Upstox Franchise||Ventura Securities Franchise|
|SBICap Securities Franchise||Tradebulls Franchise||Swastika Investmart Franchise|
|SAS Online Franchise||NJ Wealth Franchise||Sushil Finance Franchise|
|SAMCO Franchise||PayTM Money Franchise||Jhaveri Securities Franchise|
|Religare Securities Franchise||Parasram Holdings Franchise||Jainam Share Consultants Franchise|
|Reliance Securities Franchise||My Value Trade Franchise||Indiabulls Ventures Franchise|
|Profitmart Franchise||Axis Direct Franchise||Standard Chartered Securities Franchise|
|IDBI Direct Franchise||Mastertrust Capital Franchise||Choice Broking Franchise|
|Yes Securities Franchise||Karvy Franchise||Canmoney Franchise|
|Way2Wealth Franchise||K R Choksey Franchise||LKP Securities Franchise|
|Bonanza Portfolio Franchise||JM Financial Franchise||Anand Rathi Franchise|
|BMA Wealth Creators Franchise||Geojit Finance Franchise||Alice Blue Franchise|
|KIFS Trade Franchise||Fortune Trading Franchise||Aditya Birla Money Franchise|
|Alankit Assignments Franchise||Eureka Securities Franchise||Astha Trade Franchise|
What are the different types of Sub Broker Business?
There are various kinds of franchise:
In this type of franchise, the stock broking house allows and handover the control for all kind of franchising activity in that area, territory or city.
This means that for every franchise outlet that will open in your territory with your reference, then you will receive fixed percentage as a franchise fee (according to the agreement signed).
In stock broking house, master franchising method is very common and is utilized widely across India.
For example: If the stock broking house agrees to give you 50% of every franchise outlet that opens in your territory and the cost of opening a franchise outlet is Rs.100,000 then you will receive Rs.50,000 as franchise fee.
Also, you will receive royalty of a fixed percentage of the brokerage generated from time to time, according to the signed agreement.
Authorized person (AP):
It is a kind of franchising, where the authorized person who is appointed as a franchisee by the stock broking house and also by the trading member of NSE, who provide the AP agent the access to trading platform of a stock Exchange.
Therefore, the Authorized Person is registered with the stockbroker and SEBI regulates the stockbroker and through stockbroker it oversees Authorized Persons.
A Remisier is a representative of any stock broking house company and works as an agent on commission basis.
In the Remisier process, stock company provides the agent very less percentage of revenue sharing generated as brokerage, which is given mainly in 30:70 ratios by most of the stock Broking Companies, where 30% of the generated revenue goes to the reminder agent and 70% revenue goes to the broking firm.
Sometimes the broking house provides space in the office to the Remisier agent to deal with the clients.
The Remisier is responsible for their client base and will also be responsible for security deposit and fees segregation in various segments on behalf of the clients.
To become a Remisier agent one has to sign the agreement with the stock broking house and make some deposit amount to the broking firm.
Another similar way of earning money through Stock Broking house is to become an “Introducer”.
Here, an introducer is an agent of stock broking house who simply give the reference of highly prospective clients who are willing to open Demat accounts or want to take the franchise of that broking firm.
As an Introducer, is only job will be to referred the most prospective clients and if any conversion happens then he will get the commission for every conversion.
What is the Eligibility Criteria to Become a Sub Broker?
- Minimum he should be 12th pass, but ideally a person should be graduation degree holder.
- Should have knowledge and understanding of financial markets and must have experience managing the general finance related transactions.
- Basic computer knowledge is must.
- Good communication skill to persuade the client for business.
- Should be updated with latest information related to finance economics politics and other related subjects that can affect the stock market.
- He must clear the basic models on equity, commodity, mutual fund, currencies, etc. And should be a NISM certificate holder.
- The person should also have good Managerial skill in order to take care of his franchise office and employees.
Who are eligible for Authorized Person or AP?
- He should hold Indian citizenship.
- To become authorized person, the partnership firm must be registered under the Indian Partnership Act, 1932.
- According to SEBI, a Limited Liability Partnership (LLP) has to be registered and the Indian Limited Liability Partnership Act, 2008.
- Also, the corporate body should be registered under Indian Companies Act, 1956.