Sub Broker Business Model

What is a Sub-broker?

A sub-broker (Authorised Person) acts as a bridge between the end client and the main broker and acts as an intermediary between the client and the main broker. Sub-brokers help clients by guiding them through financial transactions in the stock markets, be it trading in securities including stocks, futures and options, and/or investments.

The role of a sub-broker also entails assisting clients in completing any paperwork that is required to trade and invest in stocks. In return for providing services to both the clients and the main broker, the sub-broker receives commission on the transactions executed by the clients on the main broker’s trading platform.

From August 2018, SEBI has discontinued registrations as sub-broker. All sub-brokers have moved to the new category of intermediaries called Authorised Person. An Authorised Person performs a similar operative role as a sub-broker in dealing with clients and the main broker.

Benefits of Becoming Authorised Person (Sub-broker)

Becoming an Authorised Person allows you to participate in the growth of India’s financial sector. Partnering with a broker like Mirae Asset Capital Markets (Mirae Asset) allows you to scale your business quickly by leveraging our platform and get 100% revenue share across all segments.

Here are some of the other benefits of becoming an Authorised Person (sub-broker):

• Low upfront investment:

  Once you partner with a broker like Mirae Asset as an Authorised Person, you don’t need to make heavy investments to get your business started. You don’t have to make heavy investments to become a member of the stock exchange like a broker. After entering into an agreement with a broker like Mirae Asset and registering with SEBI, as an Authorised Person (sub-broker), you can use the broker’s platform and resources to serve your clients’ needs.

• Offer clients multiple products:

  When become a sub-broker (Authorised Person) with a broker like Mirae Asset, you can offer your clients multiple financial products on one single platform (like Pledge Shares, Margin Trading Facility, etc apart from a trading account. Many brokers also let you offer your clients mutual funds as well through the trading platform.

• Earning Potential:

  As an Authorised Person (sub-broker), you can earn from the trades your clients execute through the broker’s platform. The more your clients trade, the more you earn. In addition, you can also offer your clients multiple products through a broker like Mirae Asset and increase your earning potential.

• Use broker’s resources and platform:

  Partner with a broker like Mirae Asset will allow you access to our technology platform, which gives an Authorise Person (sub-broker) a single integrated to track your clients’ investments and trades, generate smart reports, and get dedicated offline and online support to provide better services to clients.

How does the sub-broker business model work?

Once you partner with a broker as an Authorised Person (sub-broker), you get to earn a share of the revenue earned from your clients’ investments and trades through the broker’s platform. With the expected growth in India’s financial markets, and with Mirae Asset’s 9 revenue segments, the potential to earn a higher income is quite high.

Here is how the sub-broker business model works—

• Brand and infrastructure:

  When you partner with a broker like Mirae Asset, you can leverage our global brand and our technology infrastructure to service your clients.

• Bring in clients and provide them guidance:

  As an Authorised Person (sub-broker), you need to sign up clients and provide them guidance on trading and investing in equity markets. The range of products offered by Mirae Asset is an added advantage for you to sign up clients and bring them to our trading platform.

• Earn brokerage from clients’ trades and investments:

  An Authorised Person earns a share of the revenue from the trades and financial products sold to their clients. Many brokers provide different revenue shares for various sources of income. At Mirae Asset, you get to keep 100% of the revenue generated by your clients on their trades on our trading platform, and many other sources as well.

What are the eligibility requirements to become a sub-broker?

Although some brokers might have different eligibility criteria for you to become a sub-broker (Authorised Person), here are the minimum eligibility requirements to keep in mind:

• You need to have passed your 10th standard exams or an equivalent Secondary School Certificate exam.
• You need to be 18 years of age or above and should not be a trading member with any of the stock exchanges.
• You should not be a defaulter in any other stock exchange and there should be no criminal or fraud case pending against your name.
• An Authorised Person must have the necessary technical knowledge about financial markets and communication skills.
• If you are an individual, you should be a citizen of India.
• To become an Authorised Person, you will need to have the necessary infrastructure in terms of office space, equipment, manpower, etc to effectively perform activities on behalf of the stockbroker