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Who is a Sub-Broker (Authorised Person) and what are their roles and responsibilities?

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Published Date: 12 Jun 2024Updated Date: 30 Dec 20246 mins readBy MOFSL

A Sub-Broker, also known as an Authorized Person, is an individual or entity that acts as an intermediary between investors and a stockbroker or brokerage firm. Here are the key roles and responsibilities of a Sub-Broker (Authorised Person):

1. Client Acquisition

They help in acquiring new clients for the brokerage by promoting trading services and investment opportunities.

  • Networking: Actively seek new clients through networking, referrals, and marketing strategies.
  • Promotional Activities: Conduct workshops or seminars to educate potential clients about investment opportunities.

2. Advisory Services

Sub-Brokers often provide clients with advice on stock trading, investment strategies, and market trends, tailored to their financial goals.

  • Market Analysis: Provide insights on market trends, stock performance, and investment strategies.
  • Personalized Advice: Tailor recommendations based on clients' financial goals and risk tolerance.

3. Order Execution

They facilitate the execution of buy and sell orders on behalf of their clients, ensuring that trades are processed through the parent brokerage.

  • Trade Facilitation: Process buy and sell orders on behalf of clients, ensuring timely execution.
  • Monitoring Trades: Keep track of open positions and advise clients on necessary adjustments.

4. Client Support

They offer ongoing support to clients, addressing queries, providing market updates, and assisting with account management.

  • Query Resolution: Address client inquiries and concerns regarding trading processes or market conditions.
  • Account Management: Assist clients in managing their trading accounts and understanding account statements.

5. Compliance & Regulatory Adherence

Sub-Brokers must adhere to regulatory requirements and compliance standards set by the financial authorities to ensure ethical trading practices.

  • Regulatory Compliance: Ensure all trading activities comply with local regulations and guidelines.
  • Record Keeping: Maintain accurate records of client transactions and communications for compliance purposes.

6. Brokerage-Based Earnings

They earn brokerage based on the trading volume generated by their clients, making it a performance-based role.

Earnings Management: Track and manage the commission structure based on client trading volumes.

7. Continuous Learning:

  • Market Knowledge: Stay updated on market developments, new financial products, and regulatory changes.
  • Training and Development: Engage in professional development to enhance skills and knowledge in trading and investment.

8. Relationship Management

  • Building Trust: Foster strong relationships with clients to ensure long-term engagement.
  • Feedback Collection: Gather client feedback to improve services and address any concerns.

By fulfilling these roles, Sub-Brokers (Authorised Persons) help bridge the gap between clients and the larger brokerage firms, ensuring that clients receive personalized service while maintaining compliance with industry standards.

To conclude, on an overall basis, Sub-Brokers (Authorised Persons) play a crucial role in expanding the reach of brokerage firms while providing personalized service to investors.

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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