What is Sub broker
A sub broker is an agent of a broker, i.e. he introduces new clients to the broker. A sub broker gets a certain percentage of profit-sharing from the broker for introducing new clients. You can become a sub broker by obtaining a certificate of registration from the SEBI. It is mandatory for the sub broker to enter into an agreement with the broker as specified by SEBI
Sub Broker Franchise
You might have seen small stores of brands like PUMA, ADIDAS, etc. in your city. These stores are not owned by the Company PUMA or ADIDAS. They are owned by someone else in the form of the company’s franchisee that sells the same products as the Company PUMA or ADIDAS.
Well, the same goes with Stock Brokers. They have franchises owned by Sub Brokers.
The franchisee model exists because the stock brokers cannot have their presence in every city of the country. Generally, in this model, the broker sets up predefined infrastructure and territorial criteria.
So to own a sub broker franchise you need to have an office space that meets the infrastructure criteria set by the broker. On the other hand, territorial criteria restrict the sub brokers to have only one franchisee in a specific territory, eventually helping the sub brokers gain more visibility.
The Sub Broker Franchise helps the clients in:
Account Opening
Trading Terminals
Call and Trade Services
Resolving the Issues etc.
How Much a Sub Broker Earns In India?
Usually, Sub Brokers in India earn on a percentage sharing basis. Here’s how it works:
Sub broker introduces a client to the broker.
The client starts trading and starts paying brokerage to the broker.
The brokerage is split between the sub broker and broker on a percentage basis.
For a much better understanding, let’s take a look at an example:
Mr. Prateek is sub broker of Aliceblue India and has a brokerage sharing of 50%.
He introduces around 100 clients. These clients trade and pay an overall brokerage of ₹ 50,000 to the broker.
Then the broker will share ₹ 25,000 (50% of ₹ 50,000) with Mr. Prateek (sub-broker).
Can a Sub Broker Trade for Himself?
Yes, the sub broker can trade for himself and earn profits. In fact, it is quite easy for the sub brokers to trade as they are dealing with the stock markets throughout the day.
Any Legal Restriction?
A sub broker is not restricted from trading in the stock market.
