With the growing popularity of the share market, the opportunities have also increased several folds. Moreover, these opportunities do not stop at the trading level but also extend to various share market business. As a result, people now get actively involved in the share market as investors and business personnel.
Let us look at what all the stock market business has in store for everyone.
Share Market Business in India
It is always great to be a part of a growing career and expanding fields. One such arena is the stock market. You can join it as a trader, or you can join it as a business partner. While the former is the most common one, the latter is also gradually gaining popularity.
There are many types of share market businesses in India. Let us have a look at the most popular ones.
You must have heard the term stockbroker if you know the share market. A stockbroker is a mediator between the stock exchanges and investors. They are responsible for carrying out all the buying and selling in the stock market on behalf of the clients.
These can function independently but are mostly connected to a brokerage firm and work for many clients. The stockbrokers are regulated and have to compulsorily get registered with either of the two depositories in India: NSDL and CDSL.
The stockbrokers can be of various types: full-service stockbrokers, discount brokers, hybrid brokers, and bank-based stockbrokers. Full-service stockbrokers are the ones that provide advisory services and complete guidance to their clients. Contrary to this, the discount brokers trade on the client’s behalf. Therefore, an individual can choose the right one to suit your personal goals and requirements.
But how does a stockbroker earn?
You need to get a demat account when you enter the share market. The stockbroker facilitates the entire opening process of a demat account and is also responsible for maintaining it. It charges different fees and commissions to make it easier and more effective. So, it can be said that the stockbrokers earn their money through the money that they charge for their services.
In addition to this, you pay some fees as brokerage whenever you place a trade. This is one of the primary earning sources of a stockbroker. Most of their revenue is generated through fees on various services and transactions.
Another way of entering a share market business is becoming a sub-broker, now known as AP (authorized person), and being an active part of the share market. But what is an AP? To define it, an AP is a mediator between the stockbroker and investors.
The role of the sub-broker is to bridge the gap between the stockbroker and the clients. They help guide the clients to a particular brokerage firm and be a part of it. They further also help the clients in making some investing and trading decisions.
Apart from this, their key responsibilities also include maintenance and proper verification of documents, ensuring that no investor is facing any difficulty in investing, and acting as customer service for the clients.
Sub-brokers can be a guiding force for a smoother stock market journey. Unlike stockbrokers, sub-brokers are not listed with the stock exchanges.
If you become a sub-broker, you are exposed to a lot of knowledge and the basic idea of the industry. But how do sub-brokers make money?
A sub-broker in India earns through the commissions on every transaction. Therefore, a sub-broker makes some part of the entire brokerage that he generates. Since the earnings of a sub-broker are dependent on the trust, credibility, and brokerage of their stockbroker, it is essential to partner with a well-reputed broker.
The commission of the sub-broker varies from one broker to another, but to give a range, it can go as high as 60%-70%. This means that if you partner with the right broker and garner a lot of clients, you can make a very prosperous living out of it.
Let us understand this with an example. If person A trades and pays a brokerage of ₹20,000 carrying out multiple trades. If the sub-broker earns around 50% commission, then, in this case, he will make 50% of 20,000, which is equal to ₹10,000.
Let us now look at the requirements to become a sub-broker.
- Minimum qualification of 10+2.
- The individual should be at least 21 years of age.
- Should know about the financial markets.
- There should be no default records of the individual.
Apart from these points, a sub-broker can require an office space to function and other things as expressed by the broker.
But what are the steps to becoming a sub-broker?
- The first thing that an individual should keep in mind is the selection of the right broker to partner with. It is an essential factor because your revenue also depends on the same.
- Make sure that you fulfill all the eligibility criteria.
- Now fill out the form and submit it to the respective stockbroking house with the required documents.
- After submitting the duly-signed form with all the required documents, the exchange will carefully verify all details.
- Only after it is verified will you have to pay SEBI registration fees.
- Once everything is completed, you will get your sub-broker certificate, and then you can quickly start the services.
Now you must be wondering if there are any advantages of becoming a sub-broker. Let us, therefore, talk a little about sub-broker benefits.
- A sub-broker gets good brand recognition as it is associated with a stockbroker.
- Sub-brokers also get the luxury to work from their own office.
- Since the sub-broker is responsible for the excellent trading performance of the clients, they are given the best tools to carry out the business.
- A stockbroker makes sure that he provides all the support to the sub-brokers to avoid confusion.
A sub-broker earns well and, on top of that, also gets a good reputation in the market.
Another form of share market business is the remisier model. The word remisier means, ‘an intermediatory’. So, to begin with, a remisier in the stock market also works as a middleman between the stockbroker and a client.
A stockbroker requires clients to generate the brokerage. A remisier makes this task easier for the broker. They work as an agent of the stockbroking firm and attract new clients for the stockbroker. The word remisier is often confused with the term sub-broker. But these two are different from each other at various levels.
While a remisier works to get more clients to the stockbroker, a sub-broker has more responsibilities like providing advisory to the client. In a sense, a remisier is not the direct employee of a stockbroker like a sub-broker. A remisier can work independently and an own pace. This not only makes the work easier but also more accessible.
A remisier does not require any office space to operate like a sub-broker and can work independently. The only cost that an individual has to pay is the registration cost.
But, how does a remisier earn?
A remisier also works on the commission model. They get a part of the brokerage that they generate through their clients. But unlike sub-brokers, the remisiers don’t have a lot of responsibility and their prime job is to attract clients. A remisier’s commission can range anywhere between 10%-30%. A remisier gets a part of the brokerage that is generated through him.
Now the next question is, how to become a remisier?
The first thing that you should consider before thinking of becoming a remisier is to check the eligibility criteria. The list of things required to become is as follows.
- An individual should have good communication and presentation skills as the entire business revolves around convincing the clients.
- The minimum age of becoming is 18 years.
- Should have completed 10+2 education.
- There are certain brokers that also demand some experience in the financial field. The experience of working in the same industry gives you the confidence to talk about it from the very first day.
Apart from all these criteria, there are some documents that you need to keep handy when you want to become a remisier.
- Proof of address
- Proof of income
- PAN Card
- Aadhar card
- Bank proof
- Academic certificates.
Once all these documents are handy, you can easily apply for the remisier model. You just have to visit the broker’s website and choose the option to ‘become a partner. Once you fill in all your details like name, e-mail ID, etc, you will have to verify the documents. You will receive your unique ID in a few days after the successful verification. The time period is dependent on the stockbroker.
There are several benefits associated with the remisier model of business. Some of the advantages are listed below.
- You don’t have to pay any extra cost for the infrastructure.
- Convenience to work from anywhere and anytime.
- You can carry it out as a part-time job.
- Opportunity to earn good commission.
A master franchise is another way in which one can get into the share market business. As the name suggests, a master franchise is the one that is responsible for managing the activities of other businesses. So, all the authorized persons of that area or territory are mapped and put under your supervision when you take the master franchise of a stockbroker.
The master franchisee is responsible for regulating and also keeping a check on all the sub-brokers of the vicinity. In a master franchise, you are entitled to get the franchise fees whenever a new outlet (AP) opens in your territory. The amount of the same is fixed by the stockbroker. So the majority of the part of your earnings is dependent on the stockbroker that you choose.
For example, if it was fixed at the time of the agreement, you will get 30% of the total cost if a new outlet opens in your territory. Now the total cost comes out to be ₹3,00,000. In this case, you will get ₹90,000.
Apart from this, the master franchisee also gets royalty fees that are generated through the brokerage. This depends on all the franchisees working under the master franchise.
But how do you become a master franchise? One has to keep in mind some criteria to start a master franchise.
- SEBI registration is mandatory.
- If you are looking to start a master franchise, also make sure that you have a good network of clients in your vicinity. It ensures that you carry out the functions with complete ease.
- Set up a good infrastructure. It should be available for all the clients.
- Educational requirements- at least 10+2.
- The individual should be at least 21 years.
If you fulfill all these criteria, then you can approach the stockbroker of your choice and start the entire process.
The master franchise if run and monetized properly has the potential of generating great capital.
Suppose you went to a restaurant for lunch and really liked it. Now you want to recommend it to your friends as well, and on every recommendation, you will get a 10% discount. Wouldn’t it be so nice? The same concept in the stock market.
You can refer the demat account of a stockbroker to your friends and subsequently also earn money from the same. A lot of stockbrokers are giving the services of ‘refer and earn now’. You can take it up as a share market business, and earn with every account that you refer.
You need to keep in mind certain things before starting referring to a demat account.
- The first criteria to keep in mind is that you should have a demat account with the stockbroker that you are referring to.
- As a referrer, you should be an active trader as well.
- The referee should not have any existing demat account with the same broker.
- The referral amount is different for each stockbroker and can be anywhere between ₹200-₹1000. Apart from the referral amount, some brokers also provide gift vouchers as well.
- Within 21-30 days of the referrer sharing the referral link, the referee should open his demat account. It is only then that the referrer with be eligible for the reward.
- It is important that the referee starts trading as well.
This no doubt is a good option to earn in the stock market. Although, this requires a good social network and convincing skills because the entire revenue depends on the number of accounts opened and traded.
The stock market is a fascinating space and has millions of opportunities for everyone. If you are someone who has been planning to earn by setting up a potential business in the stock market space, then there are various share market business, to begin with. You can pick one according to your requirements and future prospect. Once you have started, network with a lot of people and you will be able to make good profits.
You should research before selecting one business and then make sure that you carry it all with your zeal and enthusiasm for great profits.