Introduction:
Authorised persons are vital cogs in the wheel of financial markets. They work as agents of brokers, providing various services to customers. Enrolling and becoming an authorised person in India warrants meeting certain requirements and passing an authorised person test. This blog sheds light on how you can enrol yourself as an authorised person.
Enrolment process and eligibility criteria
To enrol as an authorised person, you need to be an individual or entity eligible to participate in capital markets as per the Securities and Exchange Board of India (SEBI) guidelines. You may also need to meet certain extra eligibility criteria set by the brokerage firm for whom you want to become an authorised person. If you are an individual looking to become an authorised person, you must have passed 10+2.
You must also be at least 18 years old and have no criminal records. At the same time, it's important for you to understand the stock market and have the required infrastructure, including office space, equipment, etc.
Get registered with a stockbroker
Once you've fulfilled the eligibility criteria, the next step is to register yourself with a SEBI-registered stockbroker. Ensure to choose a reputable broker and fill out the authorised registration form the broker obtains from the stock exchange. Provide the required documents to your broker. While the list of documents may differ across brokers, the common documents you need to provide are as follows:​​​​​​​
- Copy of PAN Card
- Copy of address proof
- Copy of date of birth and academic qualification
Along with these, you need to provide an undertaking with your signature that you are ready to serve as an authorised person for the particular broker and will follow all the regulations.
Signing of agreement
Once you provide all the documents to the broker, the broker will verify them. Upon successful verification, the broker will draft an agreement. The agreement pens down the terms and conditions of the association, covering several aspects such as revenue sharing, compliance, exit, etc.
It's essential to read the agreement thoroughly before signing. Once you sign on the dotted lines, you become legally bound to follow the agreement to the T. If you are unable to understand any clause or aren't comfortable with any terms and conditions, talk to the stockbroker and find a solution. This helps remove any conflict that may arise in the future.
Registering with the stock exchange
Once you sign the agreement, the stockbroker will register you with the stock exchange. For this, the stockbroker will fill out an online form and submit the documents you provided along with a copy of the agreement. If the registration is on the Bombay Stock Exchange (BSE), the broker needs to submit physical copies of the documents within a week of the online application.
However, no physical copies are required if the registration is on National Stock Exchange (NSE). Uploading scanned copies is enough for NSE registration. The stock exchange will go through the documents and return them to the broker in case of discrepancies. Upon successful verification, the authorisation process will be completed.
Training and certification
Stock market investment warrants sound knowledge. Therefore, you might need to pass certain training programmes to understand markets and how they work. For this, you might need to attend courses or seminars. Various certifications from the National Institute of Securities Markets (NISM) reflect your knowledge and competence in the stock market.
These go a long way in acquiring clients and providing them with the right guidance. Prepare yourself well for these exams and get the required certifications to get started. You can ask your broker to provide materials that will help you clear these exams. Also, ample material is available on the web, through which you can enhance your knowledge.
In Conclusion
Once you enrol and register yourself as an authorised person, it's vital to review your operations periodically. This ensures you meet the set standards and also renew your authorised person registration from time to time. During renewal, follow the process set by the SEBI and the respective stock exchange. If you demonstrate continued compliance, renewal shouldn't be a problem. Also, communicate constantly with your stockbroker to remain updated on regulatory guidelines.
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