What is Sub broker?
5paisa Research Team
Last Updated: 29 Aug, 2023 04:11 PM IST

Content
- What is a sub-broker?
- Understanding sub-brokers
- Difference between Sub-broker and stock-broker
- Benefits of being a sub-broker
- How to become a sub-broker?
- Conclusion
Sub-brokers are intermediaries in the financial markets who operate under the authorization and supervision of a registered stockbroker or brokerage firm. They assist clients in buying, selling, and trading various financial instruments such as stocks, bonds, commodities, or derivatives. Sub-brokers are often associated with registered stockbrokers and function as their agents, providing clients with services such as order placement, research, and investment advice. While they do not have direct access to the stock exchange, they do facilitate transactions and assist clients in navigating the market's complexity. Sub-brokers are paid commissions or fees for transactions completed on behalf of their clients.
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Frequently Asked Questions
No, sub-brokers do not often trade for themselves. They have the authority to trade on behalf of their clients through the licenced stockbroker with whom they are affiliated. A sub-broker’s primary duty is to conduct trades and provide financial services for their clients, rather than engage in personal trading.
Being a sub-broker can be successful, but it is dependent on elements such as commission structures, client base size and activity level, market conditions, value-added services, cost management, and market competitiveness. Individual circumstances and market dynamics can have a big impact on profitability.
The main role of an Authorized person, or sub-broker, is to act as an intermediary between clients and registered stockbrokers. They facilitate trades, provide investment advice, execute orders, and manage client portfolios on behalf of the stockbroker. They play a crucial role in serving clients and ensuring regulatory compliance.
Qualifications in finance or similar professions, completing regulatory standards, demonstrating financial stability, appropriate experience, and maintaining ethical behaviour are often required to become an Authorised Person or sub-broker.