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What is Sub Broker: How to Become Subbroker?

The Indian stock market has seen a rapid surge in popularity, attracting numerous retail investors to open demat accounts. 

However, direct trading with stock exchanges is not allowed for either retail or institutional investors.

Instead, they must engage a stockbroker and open a demat account to participate in the secondary market. 

To meet this growing demand and expanding client base, the concept of sub-brokers has emerged. 

Sub-brokers play a vital role in guiding you through account opening procedures and investment decisions. 

Let’s understand what is sub broker, their benefits, and much more.

What is Sub Broker?

A sub-broker is an individual or group of individuals who assist a primary broker by helping a larger clientele trade and invest in the markets. 

Becoming a sub-broker can be lucrative and rewarding considering the various programs brokers offer for serving a larger client base, often based on tiers.

Sub-brokers play a vital role in simplifying your trading experience and ensuring compliance with regulatory requirements. 

Their services can extend to research, trade execution, and advisory support. 

This simplifies financial market complications and keeps the regular market participant updated about investing prospects.

Benefits of Becoming a Sub-Broker

Being associated with a primary broker gives subbrokers multiple benefits. Here are some of them.

1. Low Capital Requirement

As a potential sub-broker in India, you’ll find that the low capital requirement is advantageous. 

You don’t need substantial funds to start, making it a more accessible option.

This means you can enter the field with limited financial resources, reducing the initial financial burden and risk associated with setting up your brokerage services.

2. Trading & Investing Features

When you become a sub-broker, you and your clients get access to the broker’s trading systems. 

This is especially beneficial when it comes to tech-led brokers like Dhan who have tons of awesome features that make trading and investing incredible.

For example, 

3. Added Services

When you choose to be a sub-broker, you can go beyond just offering investment advice. 

Some brokerages permit sub-brokers to provide extra services like distributing mutual funds and offering loans to clients. 

This widens your income opportunities and helps your sub-broker business thrive.

Steps to Become a Sub-Broker

Here is a step-by-step guide on how to become a sub-broker in India, detailing the comprehensive process and requirements involved in entering the financial industry:

1. Select the Appropriate Sub-Broker Franchise Model

Start your journey by researching and assessing the different sub-broker franchise models offered by various stockbroking firms. 

Carefully evaluate their business structures and choose the one that aligns with your objectives and preferences. 

Consider the Dhan authorized partner program if you are looking to become a sub-broker for the fastest-growing stockbroking firm in India.

2. Verify Eligibility Criteria

Once you’ve made your selection, examine the eligibility criteria specified by the chosen stockbroking house. 

Generally, these criteria for individuals are straightforward and easily met. For example, If you have chosen Dhan, you must meet these eligibility criteria:

  • You must be a resident of India
  • You have a bank account
  • You are over 18 years old

Oh, and you must also have a budding client base that can benefit from the services you provide as a sub-broker. 

3. Submit the Required Documents

After confirming your eligibility, gather all the essential documents for your application, including:

  • Sub-broker registration application form
  • Signed agreement with the stockbroking house
  • Proof of address (e.g., electricity bill, ration card, passport, etc.)
  • Proof of experience certificate (if applicable)
  • Any other relevant documents as specified

4. Submit the Application and Payment

Once your documents and processing fee are ready, the stockbroker will submit your application electronically to the exchange and make the payment for processing the sub-broker application form on your behalf.

5. SEBI Registration Fees

After your sub-broker application is checked and approved, your company needs to register with SEBI and pay a fixed fee.

Once SEBI confirms your fee payment and registration, they’ll give you a sub-broker registration certificate and a special registration number.

This means you’re now officially recognized as a sub-broker.

Regulations for Becoming Sub-Broker

The initial step involves securing the necessary licenses from regulatory bodies such as SEBI and stock exchanges. 

Your official authorization will be granted through your affiliation with a reputable brokerage firm.

It’s important to select a well-established firm that can ensure complete legal compliance and offer the necessary support. 

Furthermore, you’ll be required to complete mandatory certification exams to showcase your proficiency and expertise.

Make sure to thoroughly acquaint yourself with all the rules, regulations, and ethical codes of conduct applicable to sub-brokers, as upholding principles of ethics and transparency is of utmost importance.

If you’re interested in becoming a sub-broker, consider exploring opportunities like Dhan Franchise or partner program, which can grant you the coveted status of Dhan Sub Broker when you partner with Dhan Stocks Ltd and meet the company’s franchise goals. 

Challenges of Becoming a Sub-Broker

Sub-brokers in India face various challenges in the financial industry. Here are a few major challenges:

  • Regulatory Compliance: Navigating complex SEBI regulations and compliance requirements can be challenging and time-consuming.
  • Intense Competition: The stockbroking industry in India is highly competitive, making it difficult to attract and retain clients.
  • Technological Investments: Staying up-to-date with technology and trading platforms can be costly and demanding.
  • Market Volatility: Coping with market fluctuations and managing risk can be a significant challenge.
  • Client Expectations: Meeting client expectations for service, advice, and returns is a constant challenge for sub-brokers.

Conclusion

Now that you’ve grasped the essence of what is sub broker in share market, you know it is a gateway to the world of stock trading. 

However, it requires diligence, market insight, and compliance with regulations. 

You should research well and evaluate each available option before moving forward on this path.Β 

Shriram Shekhar

Simplifying trading & investing through meaningful content.

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