A sub-broker is an intermediary who acts on behalf of a broker and assists investors in dealing with securities. A sub-broker is not a direct member of the stock exchange but works under the guidance and supervision of a broker registered with SEBI and the stock exchange. Before we understand the sub-broker business model, let us first understand the benefits it offers.
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The sub-broker business model is based on four main components:
To become a sub-broker, you need to obtain a registration certificate from SEBI and enter into an agreement with a broker who is a member of the stock exchange. The contract should specify the rights and responsibilities of both parties, such as the brokerage sharing ratio, the services and facilities provided by the broker, the compliance and ethical norms, etc.
As a sub-broker, your primary role is to bring new clients to the broker and help them invest in securities. You need to market yourself and your services to potential investors and convince them to open an account with your broker. You must maintain a good relationship with your existing clients and ensure their satisfaction and loyalty.
As a sub-broker, you earn a commission from the brokerage generated by your clients' transactions. The brokerage is shared between you and the broker according to the agreed ratio. For example, if your brokerage sharing ratio is 70:30, you get 70% of the brokerage, and the broker gets 30%. The brokerage sharing ratio may vary depending on factors such as the type of service, the volume of trade, the segment of trade, etc.
As a sub-broker, you can avail of various services and facilities offered by the broker, such as:
To become a sub-broker in India, you need to meet the following eligibility criteria:
As you can see, becoming a sub-broker is a rewarding and profitable business model that can help you achieve your financial goals. You can leverage the tools and expertise of the broker and provide quality services to your clients. You can also earn a handsome commission from the brokerage generated by your clients and grow your business.
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