Difference Between Sub Broker Franchise And An Authorised Person | Motilal Oswal
Difference Between Sub Broker Franchise And An Authorised Person | Motilal Oswal

Difference Between Sub Broker Franchise And An Authorised Person

If you wish to start your own business with a stock broker, there are two different options you can choose from. You can either choose to start a sub-broker franchise or become an authorised person. 

Contrary to popular opinion, a sub-broker and an authorised person are not one and the same. They’re slightly different in terms of eligibility criteria, duties and responsibilities, and the amount of initial investment that you’re required to make. 

Therefore, if you’re seriously considering a career in the stock market, it is crucial for you to know the difference between a sub-broker and an authorised person. And that’s what we’re going to be looking at in this article. 

  • Difference between a sub-broker and an authorised person   

The key differences between a sub-broker and an authorised person have been tabulated below for easy understanding. 

Sub-broker

Authorised Person

Sub-brokers are required to be registered with the Securities and Exchange Board of India (SEBI). 

Authorised Persons are not required to be registered with the SEBI. Instead, they need to be approved by the stock exchange. 

They are permitted to trade only in the equity cash market. 

They are permitted to trade in equity cash, equity futures and options, and currency derivatives segments as well.  

Sub-brokers are subjected to stringent regulatory supervision from the SEBI and the stock exchanges. 

 

And so, they’re required to comply with multiple compliance and regulatory processes.  

Authorised persons are subjected to regulatory supervision by the stockbroker and the stock exchange only. 

 

Therefore, the compliance and regulatory processes that they need to comply with are not that stringent. 

The registration and other fees that sub-brokers are required to pay is considerably higher than that of an Authorised Person. 

 

For instance, they’re required to pay around Rs. 20,000 as fees to the Securities and Exchange Board of India for the first block of 5 financial years. And Rs. 10,000 for each subsequent block of 5 financial years. 

The registration and other fees payable by Authorised Persons are substantially lower than that of sub-brokers. 

 

For instance, Authorised Persons are only required to pay a one-time registration fee of just Rs. 2,000 to the stock exchange to commence operations.

Conclusion 

As you can see from the above, there is quite a bit of a difference between a sub-broker and an authorised person. In addition to the ones explained above, another crucial point of distinction between the two is with regard to the set of onboarding requirements. These requirements tend to be stricter for sub-brokers than authorised persons.

Related Articles:  How To Choose The Right Sub Broker Franchise In India | Key Points to start Business as a Sub Broker | 10 Qualities A Sub Broker Must Have To Become Successful | How to Start & Grow Your Sub Broker Franchise in India

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