Know How Broker Or Sub-Broker is Registered?

5 mins read
by Angel One

The stock market can be intimidating, especially for first-time investors. The biggest financial blunders we hear about are almost always tied to the stock market’s maze. However, a resource that might help you relax: stock brokers.

Securities or stock brokers are essentially experts or agents who advise their clients on financial investments. Brokers help you buy and sell stocks, bonds, and other investments on your behalf. Every customer’s investment requirements are different. In exchange for this service, the stockbroker will charge a commission, which is usually a fixed fee or a percentage of the amount.

India’s securities and commodity markets are regulated by the Securities and Exchange Board of India (SEBI). Registration as a broker and a sub-broker is required by SEBI. It is impossible to engage in the profession without doing so.

How can you tell if a broker or sub-broker is licensed?

The importance of selecting the appropriate financial counselor cannot be overstated. You need someone who is dependable and capable of executing the job, not just any Joe. So, how can you know whether someone is qualified to function as your broker? Fortunately, verifying your broker or sub broker’s registration has gotten considerably easier.

Step 1: What are we seeking for?

A SEBI-registered broker or sub-broker is required.

Step 2: We’ve located the ideal candidate. But how can we be sure he’s genuine?

On their official websites, every stock market broker must display their SEBI, NSE, or BSE registered ID. If in case your broker does not have a website, you can do so, check their registration certificate using SEBI Broker Registration.

You can request an authorization certificate number from NSE for sub-brokers. Because a sub-broker is prohibited from working with several brokerage firms, this is handled by a broker. Sub-brokers can choose whether or not to post their ID on their website.

The initials “INB” begin the broker’s registration number, while the letters “INS” begin the registration number of a sub-broker.

What exactly are sub-brokers?

Sub-brokers work under stockbrokers to provide investors with investment opportunities. Sub-brokers assist stockbrokers in growing their business volume by purchasing, selling, and dealing with securities. They increase the stockbroker’s business book by bringing in new investors and assisting existing clients in reinvesting. Their responsibilities also include supporting investors with their investments by physically completing transactions, providing financial advice, and providing after-sales services.

Sub-brokers, on the other hand, aren’t registered with the exchange. As a result, they work for stockbroking firms, forming a sophisticated business network for them.

Sub-broking is a rewarding career that allows you to be your own boss. You can unlock a lot of money potential for yourself if you work hard and dedicate yourself to it. If you want to become a sub-broker, here is a step-by-step guide to enrolling.

Sub-brokers must register with India’s Securities and Exchange Board (SEBI). A contract between the stockbroker and the sub-broker also describes the parties’ rules, regulations, rights, and economic terms.

Once a registered sub-broker, he must understand everything there is to know about the work of a sub-broker.

Sub-Broker vs. Broker

What distinguishes them?

A ‘Sub-Broker’ is someone whois not a Trading Member of a Stock Exchange but acts on behalf of a Trading Member, called the Broker. Simply, a sub-broker is a registered broker’s agent. On behalf of the broker’s clients, they collaborate with them.

For some, the two sound very similar and may cause confusion. Let’s take a look at how it works.

1. Trading

In the stock market, a broker trades directly. The brokerage firm acts as a broker for its clients, buying and selling stocks on their behalf. Only a registered broker can act as a sub-broker, often known as a franchisee. The franchisee delivers the client’s buy/sell orders to the broker, who executes them. As a result, a broker acts on their own behalf, whereas a sub-broker serves as an intermediary.

2. Registration of Brokers

The SEBI requires that a broker be registered. On the other hand, sub-brokers are not required to register and are classified as ‘Authorised Persons’ under SEBI guidelines. By serving as a broker’s agent, they can gain access to a stock exchange’s trading platform.

3. Research and information

A broker is a well-established company that has access to a big pool of information and resources. Sub-brokers might benefit from frequent courses and orientation programs offered by brokers to help them better serve their clients.

4. Structure of earnings

The brokerage is a charge that the broker receives in exchange for providing its services. Sub brokers, on the other hand, are compensated through commissions. The commission is calculated as a proportion of the brokerage amount.

Equity has become a popular investment option for Indians, and this trend is expected to continue as the country’s growth accelerates. It’s not hard to see why stocks are so popular: stock market investments have provided larger returns in recent years. Past performance does not guarantee future outcomes, and equity investments are subject to market risk. Market volatility, on the other hand, hasn’t deterred investors.

Stocks and shares cannot be purchased directly by individuals or institutions. Investors must go through brokers or broking services. These brokers are authorized to trade on stock exchanges and are members of those exchanges. However, because the number of brokers is limited, the majority of investment work is done by authorized individuals.

Final Thoughts

Choosing the appropriate broker for your stock market trading and investment activity is critical. You could end up tampering with your corpus if you make a bad decision. SEBI has given you the green light as long as you have properly validated your broker or sub-broker registration.

Overall, sub-brokers are vital cogs in the capital market’s wheel, and without them, the market would not function properly. We can help you get started as a sub-broker by providing the necessary foundation through assistance, training, and its extensive sub-broker network.