A sub-broker is an agent who works on behalf of the stockbroker. Concerning his job, he is not a member of the stock exchange. In all, the functions of sub-brokers are to work as an agent of a stockbroker and assist him in buying, selling and dealing with the securities.
He also guides the broker in carrying out actual transactions.
Along with this, he interacts with investors and guides them regarding the investment of securities.
To become a sub-broker it is essential to get the certificate of registration of SEBI under the SEBI Act, 1992. The certificate gives him the authority to buy, sell or deal with the securities and stock exchanges.
It is the responsibility of the Trading Member to ensure that none of his clients is performing a duty of sub-broker without getting an authorized certificate by SEBI.
Apart from ensuring registration of a sub-broker from SEBI, it is also important for the trading member to agree with the sub-broker. The agreement enlists the rights and duties of the trading members, including the sub-brokers as well.
Since sub-broker are meant to create a link between a stockbroker and a client, it is, therefore, important to include the sub-broker in a tripartite agreement with both parties.
As per the agreement, he will assist the client in getting the contract note from the main broker. Here it is important to know that unlike stockbroker he has no right to make any payments directly to the client.
Once a person becomes a certified sub-broker, the next important part is to understand his role in different areas of his job including stock-exchange, with clients and stock-broker.
Here, we have enlisted the major functions of sub-brokers in different areas.
Role of Sub Broker in Stock Exchange
In general, a sub-broker is a franchisee house who owns a stock-broking franchise from the root company. One can avail of the benefits of sub-broker by partnering with any one of the renowned franchisers actively involved in stock-exchange.
After availing the broking franchise the major role of the sub-broker is to offer the useful-tips of stock exchanges to the clients.
Sub-broker also gets complete assistance from the stockbroker to perform the duty and to deal with various stock aspects.
Another important function of the sub-broker in the stock exchange is to keep a thorough eye on their clients. This ensures that he can earn the maximum commission by providing them the best assistance in trading.
Thus, the main role of the sub-broker in stock exchanges is to make maximum deals in his area.
Functions of Sub Brokers With Stock Broker
Apart from playing a primary role in the stock exchange, sub-brokers are meant to perform a great duty toward the stockbroker who appoints them.
Following are some of the main function of sub-broker with a stockbroker
Assist Stockbroker: The major role of the sub-broker is to offer assistance to a stockbroker in making maximum deals. He helps him in getting a large number of clients who are willing to invest in the stock and securities offered by them.
Prevents Delivery of Bad Documents: The sub-broker should not be involved in delivering the wrong or bad documents.
Cooperate with Stockbroker to Protect Clients’ Interest: A sub-broker co-operate with his broker and keep a record of transactions. They work to protect the client’s interest concerning the dividends, bonus rights, shares and other things related to securities. Also, they should co-operate with other contracting parties to replace the documents that are marked as bad delivery.
Work as an Agent of Principal Broker: A sub-broker must act on behalf of the principal broker to issue the clients’ purchase or sale notes. This helps the broker in getting detail of all the entered transactions on behalf of their client.
Functions of Sub Brokers With Traders
Sub broker works as the game-changer and plays the most important role is in making and breaking deals. Since they work as an agent of the stockbroker, their role is to help traders in getting maximum clients.
On behalf of a stockbroker, they interact with clients and influence them to invest in securities.
The major functions of sub-broker with trading clients are:
Helps in Effective Deal Making: They offer complete guidance to clients. This helps them to make an effective deal of investment in the securities. They make use of every possible way to offer effective help to the client thus succeeding in cracking deals.
Offer Marketing Suggestions: Sub-brokers are provided with useful marketing collaterals through events and seminars. This helps them to understand clients’ needs thus providing them the best suggestion regarding investment.
Provide Stock Market Update: Sub-broker working through the renowned broking companies are provided with the newsletter, email guide, etc. This helps them to stay updated with all the news and information on stocks. In addition, it helps them to connect with clients with confidence. They provide them with the stock market information that helps them in making a fair deal.
Helps in Making Final Decision: With the guidance of Trading Member, they help clients in making a final decision regarding the stock exchange. With their knowledge, they present the complex looking stock market pretty simple. This makes easier for clients to decide on investment.
To become a sub-broker it is important to understand his role in different areas. This will help in developing better relationships with the involved parties. Above all, you can seek advice from the experienced personnel involved in the job. This helps you in knowing what functions you need to perform while getting involved in the business.
In conclusion, complete knowledge and proper guidance will help you to start great. This helps you gaining success in the long run.
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More on Sub brokership
If you are looking to know more about sub brokership with stockbrokers in India, here are a few references for you: