Authorized persons are critical for the performance of the equity market. Most broking houses work on the authorized person franchise model to expand their business network. But, as the equity market structure is, the authorized persons are not enlisted under the stock exchange, at least not directly. They are associated with stock broking agencies, which are members of the exchange. These agencies employ authorized persons on a commission basis to work towards increasing their business volume by sourcing new business and assisting existing clients with business decisions. But to operate as an authorized person, one must obtain a Certification of Registration from SEBI, without which they are not permitted to operate in the market.
So, what is authorized person registration? And, if you want to start as an authorized person, how to register yourself.
SEBI has mandated it for all broking houses to sign an agreement with all its authorized persons. This agreement details out the rights and responsibilities of the trading members and authorized persons related to registration and business best practices.
It specifies that authorized persons without registration are not permitted to deal with securities, and it is the responsibility of the trading members to confirm that all authorized persons follow registration norms.
Enrolment process of an authorized person
Broking houses onboarding an authorized person need to confirm that they complete authorized person registration with SEBI, along with the prerequisites.
Not anyone can become an authorized person.(Formerly known as a Sub Broker). Although educational qualification requirements are not high (one can join the rank after 10+2 as well), one must meet specific prerequisites, failing to which his/her application will disqualify.
These prerequisites are related to meeting office space and infrastructure, financial requirements, certification and experience in trading, fitness norms under Schedule II of SEBI Regulations 2008, and such.
The authorized person registration process
1. Members willing to enroll as authorized persons can apply through an electronic platform. Trading members can do so by visiting the Authorised person Master and clicking on ‘Fresh’ to register a new member.
2. Members must submit physical documents requested by SEBI within seven days of applying, or else, the application will get rejected.
3. Member will receive a notification to make Rs 2,000 available on their Exchange Dues Account as application fees.
4. If there is any deficiency in the application, it will be sent back to the trading member for review and re-submission.
5. After processing the application, the exchange will intimate the trading member and collect SEBI registration fees by debiting Exchange Dues Account.
6. The final step involves recognition from the SRC or Stakeholders Relationship Committee.
The authorized person registration certificate is issued by SEBI and the registration number and date are made available to the trading member.
Authorized persons who are already registered with SEBI do not have to re-register if they enroll with another exchange. In that case, all they need to do is request to transfer their membership to the new exchange.
Documents required for registration
Supportive documents with your application ensure a quick and complete process. Without the right documents, your application is likely to get rejected. So, here is the list of documents that you need to submit with your application form. The deadline given by SEBI to physically provide documents with the exchange is seven days.
SEBI mentions a list of address documents that it accepts as valid proof of address. These are the latest electricity or telephone bill, valid ration card, passport, driving license, or latest bank statement.
Proof of experience:
The authorized person registration process has made it mandatory to provide certification of expertise in case the applicant’s qualification is less than HSC.
Steps to follow the registration
– Update yourself with the code of conduct and bylaws of the stock exchange with which you have enrolled.
– Pay the required application fees and annual charges on time.
– Adhere to Schedule II of Regulation, which explains the code of conduct.
– Maintain net worth as described under Schedule VI of Regulation
India has one of the best stock market indices that are also well-regulated. And, authorized persons are recognized as key players in the equity market, playing the primary role of offering investment services and assistance to clients. Authorized person registration is a critical step to confirm that the high level of integrity and transparency that SEBI aims at is conserved.