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Difference Between Sub Broker & Authorised Person

Most people are aware that they cannot carry out share transactions on their own in the stock market. They have to do it through a broker. Most of the share transactions by ordinary investors are carried out by sub-brokers appointed by the broker. But there’s another entity through which these types of transactions can be carried out, and that’s the authorised person.

So what is the difference between sub-broker and authorised person? Well, the difference is not all that substantial. Let’s look at the roles of authorised person vs sub-broker.

Before that, a peek into the definition of a sub-broker given by the Securities & Exchange Board of India (SEBI): “A sub-broker means any person not being a member of a stock exchange who acts on behalf of a stockbroker as an agent or otherwise for assisting the investors in buying, selling, or dealing in securities through stockbrokers.”

In short, a sub-broker is someone who acts on behalf of a stockbroker, in exchange for which he is paid a part of the brokerage charged from clients.

SEBI defines authorised person as an “…individual, partnership firm, LLP or body corporate who is appointed as such by a stockbroker (including trading member) and who provides access to a trading platform of a stock exchange as an agent of the stockbroker.”

So in the authorised person vs sub-broker comparison, there is no significant difference. The only difference was that sub-brokers had to register with SEBI, while authorised persons had only to seek registration from the exchange concerned.

However, these differences do not matter any longer, since SEBI, in a circular issued on 3 August 2018 has decided to discontinue the sub-broker as a category to be registered with it.

Here is the gist of the SEBI circular:

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SEBI circular on authorised persons

  • No new registration shall be granted to any person as sub-broker. Any pending applications for registration as sub-brokers under process shall be returned to the concerned stock exchanges for onward transmission to the applicant.
  • Registered sub-brokers will have time till 31 March 2019 to migrate to act as an authorised person (AP) or trading member (TM). Sub-brokers who do not choose to migrate into AP or TM will be deemed to have surrendered their registration with SEBI as sub-broker, w.e.f. March 31, 2019.
  • Consequent upon migration/ deemed surrender, the certificate of registration granted to the sub-brokers by SEBI shall stand withdrawn.
  • Sub-brokers have the option of either becoming trading members if they meet the eligibility criteria prescribed by stock exchange by-laws and SEBI regulation.


Since authorised persons are now favoured over the sub-broker category in favour of authorised persons, any discussion on the various merits and disadvantages of each class is irrelevant. However, for the ordinary investor, there will be no change on the ground. He or she will continue to invest through intermediaries. You can call them sub-brokers, or you may describe them as authorised persons, but the function necessarily will remain the same.