Roles & Responsibilities of a Sub Broker – Detailed Analysis

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This is a detailed analysis of the Roles & Responsibilities of a Sub Broker in India.

Sub-brokers are an integral part of the stock market; stockbrokers and traders/ investors depend on sub-brokers, and thus they play many roles.

As per SEBI, a sub-broker is any individual who is not a member of any stock exchange and acts on behalf of a stock brokerage house that is a member of any stock exchange.

Sub-brokers are now referred to as Authorised Persons and act as the stock brokers’ agents for acquiring clients and offering them the required services.

This article will discuss sub-brokers’ primary functions and roles for stock brokers, stock exchanges, and investors. Let’s begin with the primary functions.

Roles & Responsibilities of a Sub Broker


Roles & Responsibilities of a Sub Broker

The primary functions of a sub-broker in the stock market can be classified into three heads. They are as follows –

Client Acquisition

A sub-broker’s first and pivotal responsibility is to acquire clients. Sub-brokers identify potential clients who are looking to start trading or investments.

They have potential net worth for investments but need to know how to do it, or people are already working with other brokerage houses and similar potential clients.

After identification of clients and sub-brokers, try to understand their financial standing, income, expenses, and investment goals or life goals to build the ground for their pitch.

Then they pitch about the stock brokerage house they are working with and also help the potential clients to understand how they can benefit by opening an account with the brokerage house.

Once the potential client likes the pitch and if they are willing to open an account, and finally open the account, then the client acquisition process completes.

For client acquisition, as a sub-broker, you will receive a flat fee and commission from the brokerage generated by the clients.



Client Activation

While people usually think that once the account is opened, the sub-broker receives the commission, that is not the scenario.

Only when the client who has opened an account with a stock brokerage house starts trading or investing using the stock broker’s platform can the sub-broker generate a commission.

Here comes the second crucial responsibility of a sub-broker which is client activation.

You may not believe it, but as per reports, around 60% of clients need training sessions, trading sessions, and support from the sub-brokers to start trading and using the trading platforms.

Thus, after acquiring the clients, and helping them open the account, for most of the clients, you also need to help them start trading. Then only you can start earning from them.


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Client Servicing

The third pillar of responsibilities of a sub-broker is client servicing. It includes providing trading calls and helping clients with transactions-related issues and trading-related issues.

Then it also includes the support the stock broker offers to reach the clients. This is all about retaining the client with the best services that can be offered.

While these three above are the primary responsibilities or functions of any sub broker, there are other important roles played by them which are discussed below.


Stock Tips & Calls

Apart from fulfilling the responsibilities towards the stock brokerage house they are associated with, they must also do multiple duties towards their clients.

Sub-brokers are often required to offer clients investment ideas, suggestions, and tips.

If the stock broker mandates the same, then that’s a different issue, but they, on their own, often offer these services to retain clients and grow their business.

Follow SEBI Rules

While sub-brokers are not members of stock exchanges, since they work as agents of stock brokerage houses, they must also abide by the rules of stock exchanges.

They also fulfill responsibilities such as thorough verification of clients and help in the documentation process set by the stock exchange, SEBI, or other authoritative bodies so that all clients can properly complete the documentation and KYC process.

Then, maximizing deals is another big responsibility of sub-brokers for the stock exchanges.

Research & Publish Reports

The original stock brokers provides research reports and stock suggestions to the sub-brokers that they offer to the clients.

However, the sub-brokers are also allowed to research independently to help the clients.

Assist in Account Opening

If clients need account opening assistance, then sub-brokers can also open their accounts.

Help in Order Execution

Another important role of a sub-broker is of a dealer or terminal operator.

If the client asks you to trade on their behalf, you must place the orders and square them off per the client’s instructions.


Check out these amazing Sub Broker Franchise Businesses

Upstox Franchise Angel Broking Franchise
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5Paisa Franchise IIFL Franchise
Kotak Securities Franchise ICICI Direct Franchise

Importance of Sub Brokers in Stock Market

In the above sections, you have read about the roles and responsibilities that a sub-broker/authorized person will have. Now let’s see why a sub-broker is also important for investors and stock brokers.

For Investors

  • Sub-brokers are like home tutors for investors and stock brokers at the school. Sub-brokers make it easy for them to open the Demat and trading account with the right brokerage house. If the investors individually open an account, it takes more time for KYC, while with sub-brokers, it is processed on a priority basis.
  • Sub-brokers help investors choose the right brokerage plan and also help them invest according to their investment goals.
  • If the investors face any issues, they can contact the sub-brokers anytime and get the same sorted. So, sub-brokers are always available for investors, especially during market hours.

For Stock Brokerage Houses

  • Sub-brokers are like the hands of stockbrokers. Since a stock brokerage house can’t reach every corner of the cities, and country, they partner with sub-brokers who act on their behalf of them and help them expand their business.
  • Sub-brokers also help the stock brokers understand the client’s different requirements. This helps stock brokers to develop their products and services. This, in turn, helps in growing the business.

Roles & Responsibilities of Sub Broker – Conclusion

So, sub-brokers have to fulfill different responsibilities, and all these efforts become worthwhile because of the handsome commission they receive at the end of the month.



 

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