Investing in the stock market requires expertise, and many traders seek professional assistance to navigate the complexities of trading. This is where a sub broker (also known as an Authorised Person) plays a crucial role. A sub broker is an intermediary who works under a stockbroker to facilitate client transactions and provide financial advisory services. Unlike a full-fledged broker, a sub broker does not have direct membership with stock exchanges but operates under a registered stockbroker.

Roles and Responsibilities of a Sub Broker

A sub broker has several responsibilities, ensuring smooth trading experiences for investors. Some of their key roles include:

1. Client Acquisition and Relationship Management

A sub broker is responsible for onboarding clients and building strong relationships with them. They help investors understand market trends, investment strategies, and trading platforms, guiding them in making informed decisions.

2. Facilitating Trades and Transactions

Although a sub broker does not execute trades directly, they assist clients in placing orders through the stockbroker’s platform. They also help with account management, margin funding, and compliance with regulatory requirements.

3. Providing Market Insights and Advisory Services

Sub brokers stay updated on stock market trends and provide valuable insights to clients. They offer recommendations based on research, helping investors choose stocks, mutual funds, or derivatives that align with their financial goals.

4. Ensuring Compliance and Risk Management

Stock trading involves various legal and regulatory compliances. Sub brokers ensure that their clients adhere to SEBI guidelines, risk assessment norms, and KYC procedures to maintain transparency in trading.

5. Managing Revenue Sharing and Sub Broker Commission

One of the primary incentives for becoming a sub broker is the sub broker commission structure. Sub brokers earn a commission based on the transactions executed by their clients. The revenue sharing model between the sub broker and the main broker varies but typically ranges between 50% and 80%, depending on factors such as client volume, brokerage charges, and services offered.

How Does the Revenue Sharing Model Work?

The revenue sharing arrangement between the sub-broker and the main broker is crucial in determining earnings. This model is structured as follows:

• Fixed Commission:A predetermined percentage of brokerage revenue is shared between the stockbroker and the sub-broker.
• Variable Model:Commissions fluctuate based on client trading volume and other performance metrics.
• Hybrid Model:A combination of fixed and performance-based revenue sharing.

Conclusion

A sub broker plays a pivotal role in bridging the gap between investors and stockbrokers. Their responsibilities range from client acquisition to financial advisory, compliance, and revenue sharing management. With the right knowledge, network, and platform, sub brokers can build a successful business while assisting traders in maximizing their investment potential. Whether working with Mirae Asset Partners or competitors like Zerodha, Groww, and Upstox, choosing the right brokerage partner can significantly impact their growth and earnings in the stock market ecosystem.