Stock trading has become a popular trend, especially over the last few years. Apart from trading in the stock market, several stockbrokers have also been on the rise. Many stockbrokers have been adding thousands and lakhs of investors to their platforms every month. Authorised Persons can do wonders when it comes to gaining capital and building wealth.
The Increasing Trend
As many investors step into the stock market field, several stockbroking houses have their hands tied and their schedules all booked up and busy. Apart from stock broking houses, authorised persons have also been on the rise due to the large influx of investors. These authorised persons play a prominent role in maintaining a balance in the investment ecosystem. These authorised persons are usually referred to as authorised persons (APs) and they basically act as middlemen between an investor and a stockbroker. Typically, several entrepreneurs and businessmen take a leap to become an authorised person.
Essentially, an authorised person will make trades and investments on behalf of the individual who is registered with a stockbroker. So, investors do not have to worry about their financial assets and dealing with their securities as authorised persons will take care of such parameters. The Authorised Person’s business would be an exceptional idea for individuals who have an understanding of the stock market and are eager to learn and implement more in the field. If you consider yourself to be passionate about stock trading and investing and wish to become an authorised person, let us delve deeper into the different parameters that can help you become one.
Becoming an authorised person can be exciting. However, there are certain eligibility criteria that have to be met in order to become an authorised person. Each trading member that you may want to partner with can have different eligibility criteria. However, there are some common eligibility criteria as follows that you can verify.
It is necessary for you to have passed 10+2. Although not mandatory, it would be ideal if you have a graduate degree.
Having subject knowledge of financial markets is a big plus. You could gain this knowledge either by experience or through various sources like online courses and books. Although not mandatory, it would be ideal to understand the basic NISM modules on mutual funds, equities, futures & options, and commodities.
To be an authorised person, you would require computer skills. So, ensure that you have a basic knowledge of computers.
As you would be a middleman between investors and stockbrokers, having good communication skills and interpersonal skills is essential.
With experience comes good management skills. It would be a great plus if you have good managerial skills as being an authorised person would require you to manage different resources.
Capital Requirements and Working Expenses Needed for an Authorised Person
If you want to be an authorised person, you have to have a certain setup ready to begin your journey. Let us have a look at all the requirements and the possible expenses that they could incur.
This initial deposit is made to the main broker. This is a one-time expense, so you would not have to frequently spend money on this requirement again. Besides, the initial deposit is a capital investment. The cost incurred with this requirement varies based on the broker. The initial refundable deposit ranges between Rs. 50,000 and Rs. 3 Lakhs.
Initial Registration Expenses
The initial registration expense is a capital investment and also a one-time expense. Hence, you do not have to worry about recurrently paying for this requirement. When it comes to expenses for this requirement, the one-time registration fee is Rs. 2,000 + GST. For NCDEX, the registration fee is Rs. 1,000 + GST.
Computers, Workstations, and Television
Yet again, buying such equipment is a one-time expense as they have a long lifetime. Typically, a computer would range anywhere between Rs. 50,000 to Rs. 70,000. When it comes to a television, it could range between Rs. 15,000 and Rs. 20,000. The workstation could come up to a maximum of Rs. 20,000. Overall, your expenditure for this requirement would vary between Rs. 85,000 and Rs. 1,10,000.
The office space, if you have rented it out, would require a monthly rent to be paid. This is a recurring expense. Besides, the cost of the requirement can depend on several factors such as the size of the office space, locality, furnishing capacity, etc. In contrast, you could also work from home, thereby cutting out the need to pay recurring monthly rent.
An authorised person would more or less have 2 employees or more working with them. Yet again, this expense is a recurring expense on a monthly basis. Depending on the skills and expertise of the employees, the expense might vary.
Telephone, Electricity, and Miscellaneous expenses
These expenses are recurring on a monthly basis and depend on the usage of the facilities at the workspace.
In a Nutshell
Now that you have an idea of the different requirements and the expenses incurred to become a authorised person, ensure to stay financially sufficient before beginning your journey.