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Roles and Responsibilities of Sub-Brokers explained


With India’s burgeoning economic growth, the stock market has emerged as a favoured investment choice among investors. The appeal of stocks is evident, considering their recent track record of delivering stellar returns. However, it is crucial to note that the past performance of stocks is not indicative of future returns, and despite market volatility, investors have remained undeterred.

However, individuals and institutions cannot invest in the stock markets directly. As per the Securities and Exchange Board of India (SEBI) guidelines, they need a stockbroker or sub-broker to buy or trade securities. If you’re new to this term, this article is for you. Here, you will explore the meaning and functions of stockbrokers and sub-brokers in detail. Keep reading.


What are stockbrokers and sub-brokers?

Stockbrokers and sub-brokers refer to individuals or entities that facilitate the buying and selling of securities in the stock markets. Stockbrokers are licensed professionals or firms that are authorised to execute trades in the stock markets on behalf of investors. They may also offer additional services such as research reports, market analysis, and investment advisory.


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Sub-brokers, on the other hand, are individuals or entities who act as intermediaries between the stockbroker and the investor. They are authorised to place buy and sell orders in the share markets but operate under the banner of a SEBI-registered stockbroker. Sub-brokers usually cater to specific geographic regions or niche markets.


Roles and functions of brokers

Below are the roles of stockbrokers and sub-brokers in the share market:

1. Client acquisition and assistance

One of the primary roles of sub-brokers is to acquire clients for the brokerage firm they represent. Sub-brokers have a localised presence and educate potential investors about various investment opportunities. They assist potential investors in opening trading and Demat accounts. They also guide clients in understanding market trends, investment products, and risk management strategies.

2. Place and execute orders on the exchanges

Once sub-brokers get clients on board, they facilitate the process of placing buy and sell orders on behalf of their clients. They ensure the timely execution of trades at the best available prices while maintaining transparency and efficiency.

3. Market research and analysis

Sub-brokers often conduct market research and analysis to provide valuable investment insights to their clients. These include analysing company fundamentals, market trends, and economic indicators to help clients make informed investment decisions. Sub-brokers make efforts to keep their clients updated with relevant market news, research reports, and investment opportunities.

4. Relationship management

Building and maintaining strong relationships with clients is another crucial aspect of a sub-broker’s roles and responsibilities. They provide personalised assistance to clients, address their queries and concerns, and act as a bridge between clients and the stockbroker they represent. They help their clients understand the complexities of the stock market, thereby ensuring client satisfaction.

5. Compliance and regulatory adherence

Sub-brokers are responsible for ensuring compliance with regulatory requirements and ethical standards set by regulatory bodies, such as the SEBI and the RBI (Reserve Bank of India). They also verify the documents submitted by their clients for Demat account opening and adhere to the KYC (Know Your Customers) norms to prevent money laundering and unauthorised trading activities.

6. Risk mitigation strategies

Sub-brokers assist their clients in managing risks in their investment portfolios. They implement risk mitigation strategies, such as portfolio diversification, setting realistic investment goals, etc. Sub-brokers educate their clients about the risks associated with various investment vehicles and help them make well-informed investment decisions aligned with their risk tolerance and financial objectives.

7. Client reporting

Sub-brokers provide their clients with periodic reports, comprising portfolio performance updates, transaction records, and account statements. These reports enable investors to monitor the progress of their investments and gain insights into their trading endeavours.


To conclude

In the intricate world of the stock market, sub-brokers play a multi-faceted role in facilitating investments and fostering investor confidence. Their functions include client acquisition and assistance, placing trade orders on the exchanges, providing market research reports, implementing risk mitigation strategies, and ensuring compliance and regulatory adherence. Their expertise and dedication contribute significantly to the functioning and growth of the stock market ecosystem, making them indispensable players in the realm of the financial world.


Related Blogs: Roles and Function of a Sub Broker | Sub Broker Franchise Without Deposit | GST Compliance On Stock Broking Services | Sub Broker Business Model | Roles and Responsibilities of Sub-Brokers


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