Sub-broker Registration

Sub-broker registration is an essential step for anyone who wants to start a franchise business of any stockbroking firm.  India has one of the best stock market indices in the whole world, which are well-regulated. 

A stockbroker is a person who is responsible for assisting his clients and investors for purchasing or selling shares in the secondary market. Without registration, one can’t perform such functions.

Sub-Brokers has a primary role in the stock market. Strict guidelines related to corporate governance have been laid down by SEBI. 

Sub-broker Registration Review

According to the Securities Contracts Rules, 1957, a stockbroker license is someone who has the right for trading in the renowned stock exchange of India. It includes a trading member also who works in a disciplined way and knows the degree to which he can bear the loss.

With the rise in electronic trading, higher integration with the international market is necessary for different aspects such as the flow of capital, products, and processes without introducing new financial products.

Essential qualities in a sub-broker:

To be an ideal sub-broker, it is essential for him to have certain basic qualities which are explained in the following section:

  1. He/she should be well aware of the market situations that impact the prices of the stock.
  2. He/she should have the expertise and the ability to provide a judgment call for his clients.
  3. It is necessary to stay updated about the advanced tools and techniques to remain ahead in the competitive scenario.

Sub-broker registration Prerequisites:

Some prerequisites need to be fulfilled to become a sub-broker. First of all, an application needs to be submitted only if he is eligible to do so, or else it will be rejected by the board. The following factors will be taken into consideration on receiving the application:

Step 1: He must fulfil the eligibility criteria for getting the membership of any stock exchange.

Step 2: For carrying out the functions efficiently, the person must have relevant infrastructure that includes an office setup where he will carry out the business functions. Along with this, there should be a desktop, a telephone line, and employees who will provide assistance in performing various operations.

You should make sure that the office is located at a prime location so that it is easily identifiable. Suppose you establish it at some remote location, it will become much more difficult to identify it, which is not a favourable factor for your business to flourish.

From an aesthetic point of view, a decent interior decor is needed in order to create a good impression on the potential customers visiting your office for the first time.

Step 3: It is necessary for the client to have certain experience in trading securities, as this will help him in carrying out the business processes in a much better way, thus helping a sub-broker to succeed in his venture.

Step 4: If there are any disciplinary proceedings to which the applicant or his employees, partners, or directors were subjected to, as per applicable laws.

Step 5: The fitness of the applicant according to Schedule II of SEBI Regulations, 2008.

Step 6: Presence of any financial liability as per the SEBI Act, Securities Contracts Act, 1956 or some appropriate rules/regulations.

Step 7: If the person has been certified under the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007 or not

Step 8: If the applicant fulfils the requirements related to net worth and deposits specified under Schedule VI or not.

Step 9: All the eligibility criteria mentioned under Rule 8 of Securities Contracts (Regulations) Rules, 1957 should be satisfied by the applicant which involves the minimum director needs, work experiences, types of the constitution who can apply, etc.


Sub-broker registration Requirements :

A SEBI registration is needed to function as a stockbroker license, But if you are an existing member of some stock exchange, then it is not necessary to register again when you want to get enrolled in another stock exchange. 

The only thing that is needed is to seek the stock exchanges’ approval where you want membership.

According to Schedule III of regulations, the fees need to be submitted by the applicant.

Suppose the fees are due on a certain date, the board has the power to grant a 6-month extension from the due date if you succeed in providing a valid cause. 


Sub-broker Registration Process:

The following steps need to be followed to complete the sub-broker registration process:

  1. There is a Form A in Schedule I which needs to be filled up and submitted to the stock exchange where you want a membership.
  2. The stock exchange is responsible for forwarding this application form to the SEBI, i.e Securities Exchange Board of India, within 30 days of its submission.
  3. The application is analyzed thoroughly and if it is found to satisfy various conditions enumerated under Regulations 5, the applicant gets a certificate of registration. This information is sent to the stock exchange.
  4. Suppose the board is dissatisfied with the application contents, this is informed to the applicant within a period of 30 days. After this also, he is provided with a chance to present what he has to say in this regard if any.
  5. Within 30 days of the intimation of the rejection of his application, the applicant has the chance to reapply. The boards consider this and communicate it back to the applicant. 

Requirements After Sub-broker registration:

If the applicant’s request regarding the registration is successful than he has to fulfil some requirements after this. These are enumerated as under:

  1. You must stock to the application rules, regulations and bye-laws of the stock exchange where you are enrolled.
  2. The sub-broker has to communicate the alterations in the control or management to the Board.
  3. The require application fees have to be paid.
  4. According to the schedule VI, the net worth requirements have to be maintained.
  5. The sub-broker must stick to the Schedule II of the Regulations which specifies the code of conduct.
  6. In a period of 1 month from the date on which the grievances were received, these have to be addressed and accordingly it has to be communicated to the board.

In case you are looking to become a sub-broker or a stockbroking partner in any form, let us assist you in taking the next steps forward.

Just fill in a few basic details in the form below to get started:

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For more information on the stockbroking space in India, here are a few references for you:

 

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