What is Sub-Broker and Advantages of being a Sub Broker

Sub Broker

You might have heard of a ‘Stock Broker’ or ‘Broker’, but you're probably not familiar of a ‘Sub-broker’. A sub-broker acts in the same capacity as a broker, i.e., acting as a middleman between two parties. However, a stockbroker act as an intermediary between an investor and the stock exchange; a sub-broker acts as an intermediary between the stock broker and the investor. As sub-broker works for a stockbroker, and responsible to bring clients to the brokerage firm. Sub broker also assists clients in dealing with their investments. As a reward, the sub-broker receives a fixed percentage of the transaction.

Difference Between a Sub Broker and a Stock Broker

When someone asks: “What is a sub-broker”; comparing a broker to a sub-broker is perhaps one of the best way to explain it. A sub-broker, as previously said: works under a broker.

However, there are few differences between the two:

• One of the key differences between two is: while stockbrokers are registered trading member of the stock exchange; sub-brokers are not. This does not mean that sub brokers do not need any certificate; they must obtain a certificate of registration from SEBI to operate their business.

• Another key difference to note is that: while stockbrokers get paid by charging brokerage fees to their clients; sub-brokers get paid by charging a sub brokerage fee to brokerage firm.

Advantages of being a Sub Broker

The advantages of being a sub-broker are as follows:

• The first and foremost advantage of being a sub-broker or a ‘franchise’ is the knowledge and insights, you get on the stock market, which could be further utilized for personal trades. This self-sustaining loop not only allows sub-brokers to better serve their clients but also manage their investments.

• Another advantage of being a sub-broker is that: the brokerage firm may allow you to offer other services apart from broking; for example, broker could allow its sub broker franchisees to offer mutual fund distribution and Loan service to their clients.

• The third advantage is that: you do not need a large initial investment as a sub-broker, because your franchiser covers the majority of the costs. To start a career as a sub-broker, a sub-broker just needs a minor investment of say 10,000 rupees or more.

As a result of increase in demand for brokers - and surplus disposable income to invest; the role of Sub broker has gained momentum.

While becoming a broker necessitates extensive permissions and certifications; being a sub-broker allows you to perform similar functions, without having to register as a Trading Member.

You could consider partnering with reputed businesses such as ATS, to take advantage of their expertise and smooth processes.

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