Closing your sub-brokership is a critical decision, requiring careful planning and execution. This article guides you through the process of how to close sub broker business & highlights essential steps for a smooth transition.
Learn about the legal obligations, client communication strategies, and financial considerations that ensure a successful closure while preserving your reputation and relationships within the brokerage industry.
Whether you’re retiring or exploring new opportunities, this comprehensive guide will help you confidently navigate the complexities of ending your sub-brokership.
What is a Sub Broker Franchise?
Sub brokers act as intermediaries in stock trading, connecting regular investors with more significant financial firms.
These sub-brokers provide services like investment advice and executing trades. Here’s the process: As an investor, you engage with a sub broker.
These sub-brokers offer various services, including advising investment choices, managing stock trades on your behalf, and sharing valuable insights about the stock market.
The primary role of a sub broker is to collaborate with established financial firms, often known as brokerage firms, which have the expertise and authority to engage in stock market activities directly.
When investors want to buy or sell stocks, they work through the sub broker, who then communicates with the more prominent firm.
Sub-brokers earn a share of the investor’s funds for their services. They simplify stock market participation, especially for those needing guidance, making it more accessible to a broader audience.
Before getting into how to close Sub brokership, let’s understand a few major reasons to close a Sub Broker Business.
Why does a Sub Broker want to close a Sub Broker Franchise?
Sometimes, it’s not your first choice, but there are two main reasons why you might want to do it.
First, if your sub broker business isn’t doing well and you want your security deposit back. This deposit can be anywhere from Rs.25,000 to Rs.1 lakh but may vary from broker to broker.
Secondly, when another brokerage firm offers you a better deal, you have two options in this case.
You can transfer your sub-brokership to a trusted family member, which is smart. Or, you can close your current sub-brokership and move all your clients to the new brokerage.
This can be a lot of work, but it might be worth it if the new offer is good. So, those are the two main reasons and options for closing your sub-brokership.
How to Close Sub Broker Business? or How Cancel Sub Broker Franchise?
In this comprehensive blog, we’ll delve into the 11-step journey of closing your sub-brokership successfully and ensuring you get your security deposit back. So, let’s embark on this journey together.
Step 1 – Send an email to your broker’s relationship manager or cancellation team:
To begin the process, write an email to your Relationship Manager (RM) or the cancellation team. In the email, let them know why you want to close your sub-brokership and ask them for the necessary documents to cancel your franchise. This is the first vital step to get things moving.
Step 2 – Give your RM a call to request the franchise cancellation document:
Your Relationship Manager (RM) is the key contact for this procedure. After sending the email in step 1, pick up the phone and call your RM to ask for the document needed to cancel your franchise. Be ready to discuss why you want to do this and answer any questions they may have.
Step 3 – Prepare the cancellation document on a Rs.600 stamp paper and get it notarized:
Now, it’s time for the paperwork. Print the franchise cancellation document on a special Rs.600 stamp paper. Sign it at the six specified places, and then take it to a notary to get it officially verified.
Remember to make copies and take photos for your records. This step ensures that your cancellation is documented correctly and officially.
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Step 4 – Send the stamped document to the broker’s main office:
Take the notarized document you prepared in step 3 and send it to your broker’s main office. Use a trustworthy courier service or speed post to ensure it reaches them safely.
Remember to let your Relationship Manager and the cancellation team know the package details you’re sending.
This step is crucial to ensure everything is correctly received and recorded at the main office.
Step 5 – Verification of documents:
The sub-brokerage operations team will contact you to double-check the information in the documents you sent.
When this step goes smoothly, your documents proceed further in the process. This is a way to ensure everything is correct and on track.
Step 6 – Getting ready for deposit refund:
Now, the sub-brokership accounts team has taken over. They will do some calculations.
First, they determine the fees for cancelling your sub-brokership and your exchange membership, if applicable.
They’ll also check if you owe any money to your clients. This all goes into a document called an account statement, and it usually takes about 15-20 days to get it ready.
This step involves sorting out the financial details before giving you any money back.
Step 7 – Verify your account statement:
You’ll receive your account statement in your email. Carefully check it to ensure everything looks correct and you agree with the charges.
If everything’s okay, send an email to confirm that you’re okay with it. Your stockbroker will then take care of the paperwork.
They put together a special file with your sub broker cancellation document, account statement, your email saying that you approve all the records and other related documents.
This file is sent to the stock exchanges and SEBI (a regulatory authority). It’s making everything official.
Step 8 – File submission to Exchanges & SEBI:
Exchanges and SEBI step in for verification. They look at the documents you sent to ensure everything is in order. This is a double-check to make sure everything is done correctly.
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Step 9 – Verification and Removal of Sub Broker Code:
Upon confirmation from the stockbroker, your sub broker code is removed from the active sub broker list. This process typically takes 10-15 working days.
It’s like ensuring your name is removed from the active sub-brokers list once everything is verified and settled.
Step 10 – Receiving Deactivation Confirmation Emails:
In this step, you’ll get confirmation emails. Your stockbroker and SEBI will send you emails confirming that your sub-brokership has been closed and your sub broker code is deactivated.
It’s like getting official emails saying everything is done and your sub-brokership is no longer active.
Step 11 – Getting Your Security Deposit Back:
Around seven working days after your sub-brokership is closed, the money from your security deposit will be deposited into your account.
However, remember they’ll subtract any cancellation fees and money you owe to clients before receiving it. So, you’ll get your money back, but some deductions will be made before it’s all settled.
How to Cancel Sub Broker Business? – Conclusion
Closing your sub-brokership might take a lot of work, but with this roadmap, you can navigate it successfully.
Understanding the process is vital whether you’re closing due to financial challenges or exciting new opportunities.
By following these guidelines, you’ll safeguard your interests and maintain a positive professional reputation in the industry.
Remember to be patient and stay in touch with your broker during this journey.