How to Become a Sub-broker?

In today’s competitive world, it is not so easy to start your own business with little initial investment. Every business demands a high investment and also involves a lot of risks especially, the risk of failure. They also require sufficient working capital to maintain the day to day expenses a business incurs to stand in the market. And as far as getting the answer to how to become sub broker is concerned, well, it is not that difficult as it looks like.

Here we are going to talk about the formalities, process, and procedure for you to become a sub-broker.

To provide you with quick relief, a sub-broker business is one that does not require higher investment and the associated risk of failure with the business is very low.

The stockbroker always provides its helping hand to its sub-broker through research reports, client acquisition, by providing the latest tools and technology, sales training, and a lot of other areas.

Low initial investment does not mean, your efforts should be less. All business requires full effort from one’s end. You will have to put your best in the business only then you can become a successful entrepreneur, be it any field. 

While you are trying to understand how to become a sub broker, you need to know that this is the person who helps clients or investors in their trading and investing decisions.

Though, the sub-broker is not a trading member himself or herself but works on behalf of the clients. No doubt, getting a theoretical answer to how to become a sub-broker is an easy process and but on the ground, is a profession that comes with a huge responsibility.

That is why it suits those who have the zeal of a business and want to make their career in the field of finance.


How to become Sub-broker in Stock Market?

If you are one who is ready to learn new things actively or one who has experience in the financial market, then to become a sub-broker is not a tough task for you.

For those who have high knowledge in the financial market and keep himself/herself updated in this field, sub brokership becomes an easy profession for them as well.

Everyone knows that the stock market is the second name of uncertainty, even a layman knows that there is a certain amount of risk involved in the stock market investments. But with risk, comes rewards too!

However, most of people want to maintain a distance from the stock market. They think bank-deposit is a better investment option than investing in the stock market.

Honestly, that is just a misconception.

If you understand how to analyze the market objectively, then the risk factor is much lesser.

The main function of a sub-broker is to provide the right suggestions about the buying and selling of stocks to the clients so that they can get a good profit. For this, you should have proper knowledge of the stock market.

That is – the idea of the political impact on the stock market, the effect of the world economy, and many more aspects that affect the stock market.

You should have an idea about the direction of a particular stock or market due to any decision of the government or any company. Then only you can give the right investing and trading suggestion to your clients and this way, you can keep your clients for a long time.

As a sub-broker, you must have basic knowledge of using a computer and if you have an existing client base then it certainly helps big time. Your financial knowledge should convince clients for trading and investing in the stock market.

If you do so, that implies you are doing your business in a good way.

In India, most of people don’t want to invest in the stock market due to the lack of knowledge or risk involved in this field. As a sub-broker, you should be able to explain everything related to the stock market to the client so that they can be ready to invest in this area.

For that, it becomes equally important that you start learning the basics of the stock market too. You may check out some of the stock market courses yourself.

If you are planning to start your own business with low capital, you can opt sub-broker business. You can earn regular and fixed income through the stockbroker by offering them clients as well as your services to them.


How to become an Authorized Person (AP)?

Now, since mid-2018 the term sub-broker has been replaced by the term Authorized person by SEBI. There is no need for a sub-broker in the stock market. SEBI has declared to convert all sub-brokers available in the market into the Authorized person.

It means to get to the point to understand how to become a sub broker, the very first step is registration. Sounds boring and exhausting?

Well, it is to an extent.

You are required to register yourself with a stock exchange like BSE or NSE instead of the Securities and exchange board of India. Although, there is no difference in the functioning of both. To become an authorized person, your stockbroker will help you to complete the process.

Here is the requirement to be an authorized person (AP):

  • You should have a passing certificate of 12th standard from a government recognized board.
  • Documentation and required fee should be submitted for the AP.

If you are already an authorized person:

  • You will get a fixed revenue from the stockbroker for whom you are working as an AP. Suppose, if initially it has been agreed between you two that you will get 50% of the revenue share generated by your referred client then you will get the amount for the lifetime. For example, if your referred client generates ₹10,000 in a month then your share will be ₹5,000.
  • You can continue your work through your ID from where you can refer your client to the stockbroker.
  • More referred client means more income for you.

Sub-broker Courses and Exams:

To become a sub-broker one can qualify the following exams. These exams are arranged by NSE and have three modules i.e basic module, intermediate module and advanced module. All exams under these modules have different time duration, qualifying marks, and total marks.

These exams are online test arranged at the NSE office in the area where you have applied for the exam. The main reason behind these exams is to check the financial/stock market knowledge of the candidate.

NCFM (NSE Certification in the financial market)

Basics Module
Financial market Interest rate derivatives Clearing settlement and Risk management
Mutual fund Commercial banking in India Banking fundamentals- Internationals
Currency derivatives FIMMDA- NSE debt market Capital market fundamentals- International
Equity derivatives Securities market

 

Intermediate Module
Capital market dealer module Options trading strategies Insurance module
Derivatives market dealer module Operations risk management Macroeconomics for financial markets
Investment analysis and portfolio management Banking sector module NSDL- Depository operations
Fundamental analysis module Treasury management module Commodities market module
Back office operations module Merger and Acquisition module Surveillance in Stock Exchanges module
Wealth management module Venture capital and private equity module Technical analysis module
Project finance module Financial services foundation NSE Certified quality analyst module

 

Advanced Module
Business analytics module Investment Banking module- International International Financial Reporting Standards (IFRS)
Information security services professionals Derivatives market module Equity research module
Algorithmic trading module Mutual funds module Issue management module
Financial market module Options trading module Market risk module
Securities market module Financial modeling course

 

BCSM (BSE certification on securities market)

Just like different exams and courses offered by the NSE, BSE also offers different types of courses and exams to those who want to make their career as a sub-broker, stockbroker, mutual funds etc.

List of modules are:

  • Secondary market
  • Rolling settlement
  • Trading, clearing and settlement
  • Mutual funds
  • BOLT
  • Dematerialization of shares
  • Tax provisions
  • Inspection of the broker’s book
  • Sensex and other indices
  • Surveillance
  • Primary market
  • Future and options
  • Ethics and code of conduct of sub-broker and broker
  • Listing
  • Book building and IPO’s
  • Debt marketing and internet trading
  • Investor Grievance Redressal System

NISM (National Institute of Securities Market):

SEBI established NISM as a public trust in the year 2006. It offers various types of courses in Full-time and Part-time for those who want to learn and understand how to become a sub-broker, stockbroker etc

The modules under NISM will help you in dealing financial market. Even some of the organization demands NISM Certification from the employees to deal in the securities market.

Here is the list of courses offered by NISM:

  • NISM Series VI: Depository Operation
  • NISM Series VIII: Equity Derivatives certification

Full-time Program offered by NISM is:

  • Post Graduate Diploma in Management (Securities market).
  • Post Graduate Diploma in Management (Fintech).
  • Post Graduate Diploma in Quantitative finance.

The part-time programs offered by NISM is:

  • Postgraduate Diploma in Data Science.
  • Certificate in treasury management
  • Certificate in Securities Law
  • Post Graduate management in Financial management and Risk management.

They also offer many Joint Programs.


Sub-broker Expenses

To become a sub-broker, you need to make some expenses. You will be required to make the capital expenditure as well as working capital expenses.

  • At very first, to become a sub-broker, it is required to deposit security money with the stockbroker in the range of ₹50,000 to ₹3,00,000. This is a standard range of the initial investment but can differ from broker to broker.
  • The second expense which you will have to bear as a sub-broker is the registration fee. It can be range from ₹15,000 to ₹20,000.
  • Other miscellaneous expenses include electricity bills, telephone bills, office rent, internet bills etc.

How to Become a Sub-broker in India?

Finally,  coming to the main point of the above discussion. In short, we will discuss the steps involved in the process of how to become a sub-broker. Depending on the requirement of the stockbroker, you will be asked to qualify for the exam.

  • At first, You are required to qualify for an exam of NSE or BSE or NISM. However, after getting associated with a stockbroker, you may be asked for a different exam depending on their requirement.
  • Meet a stockbroker and deposit the initial investment money/Security deposit.
  • Need to deposit registration fee for the segment in which you want to register yourself.
  • Now, you can start your sub-broking business with the help and support of your stockbroker.

You can become a sub-broker just by following the above steps. This business is a great opportunity to make good money and a career with low risk and investment.

Just fill in some basic details to get started:

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More on Sub-brokership

If you wish to learn more about sub-brokership, here are a few references for you:

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