The stock market is a mighty place with opportunities aplenty. If you want to start your own business and be an independent broker, there are two different options you can choose from. You can either opt for starting a sub broker franchise or becoming an authorised person. However, you must understand the difference between these two to decide which one will give you the best chance of success.
What is a Sub-broker Franchise?
A stock market sub-broker franchise is a business that helps individuals and companies buy and sell stocks. Stock market sub-brokers have relevant licence authorisation from the main broker to carry out stock market activities.
Stock market sub-brokers work with clients who want to buy or sell stocks, bonds, mutual funds, or other financial instruments. They handle all aspects of the transaction, including researching companies, making recommendations based on their research, placing trades for clients, keeping records of trades made on behalf of clients, and maintaining an active client list for future use.
There are different types of stock market sub-broker franchises available. Some may offer services such as purchasing stock online, while others may only offer services related to buying and selling shares on a local exchange floor where trading takes place face-to-face with humans.
Who is a Stock Market Authorised Person?
A person authorised to carry out activities on the stock market is known as an authorised person. The main function of a stock market authorised person is to provide investment advice to other people. They can also assist clients in buying and selling shares, bonds, and other financial instruments.
The Securities and Exchange Board of India (SEBI) regulates all securities markets in India, including stock markets and commodity exchanges. SEBI issues permits for individuals who want to act as stock market authorised persons.
Factors That Differentiate Sub-brokers and Authorised person
Sub-brokers need to register themselves with the Securities and Exchange Board of India (SEBI).
Authorised persons need not register themselves with the Securities and Exchange Board of India (SEBI). However, they need the approval of the stock exchange.
Sub-brokers can trade only in the equity cash market.
Authorised persons can trade in equity cash, equity futures and options, and currency derivatives segments.
Sub-brokers face strict regulatory watch from stock exchanges and SEBI. They also need to abide by various regulatory processes and compliances.
Authorised persons need to follow the regulations of only the stock exchange and stockbroker. The regulatory processes are not that strict.
- Registration fees
Sub-brokers need to pay a higher registration fee than authorised persons. They need to pay INR 20,000 to the SEBI for the first five financial years and INR 10,000 for each subsequent block of five years.
Authorised persons need to pay a lesser amount compared to sub-brokers. They only need to pay a one-time amount of INR 2,000 to start their operations.
As evident above, there are significant differences between a sub-broker and an authorised person. They are governed by different laws and need to follow the specified guidelines to run their business smoothly. The restrictions and regulations are on the higher side for sub-brokers. Similarly, the financial investment is more for sub-brokers.
If you’re interested in becoming a sub-broker or an authorised person, Choice India will be an excellent option. We have been in business for years and offer reliable services with complete training facilities. Contact us today to know more details on how we can help you fulfill your dreams of becoming a sub-broker or authorized person.
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