A sub broker is one who acts as an intermediary between the broker and the client. He conducts all stock related transactions for the client just as how the broker would. An essential difference between the two is that, a sub-broker cannot work independently but has to work under another broker. However, a broker can work independently. He also gets a part of the commission or brokerage fees for the services rendered. He is part of the stock exchange that the broker is also involved with and he is also regulated by the guidelines of Securities and Exchange Board of India (SEBI). There might be sub-brokers who are not registered with SEBI. However, it is in the best interests of the client to deal with a registered one.
Qualifications to Become One
There are certain regulations and qualifications that need to be fulfilled to become a sub-broker. He should have at least passed class 12 and not be less than 21 years old. He should have obtained a certificate of registration from SEBI. He should not have been involved in any illegal activities, especially in trying to rig financial dealings. Some of the best stock brokers in India predict market conditions very wisely and guide their investors to make good returns.
Roles and Responsibilities
There are certain roles and responsibilities when he becomes a sub broker. Just like the broker he can execute the purchase or sale order which is issued by his client. He is responsible for executing the commands of his client. Subsequently, he also has to prepare sales or purchase notes once these orders are executed. On a monthly or quarterly basis he has to get the payment and brokerage fees for the transactions he has conducted. In the case that there are any defaulting clients, then it is the sub-broker’s responsibility to ensure they make their payments. In the case that the client asks for any investment advice, he can give suggestions and ideas as per his knowledge. He more or less does all that a broker does but is in direct control of the broker.
Codes of Conduct
There are some underlining rules or codes of conduct that govern a sub-broker. They should deal with clients only if they are a SEBI registered broker. In the case that they are not, then their license can be cancelled and they are not authorized to conduct business. There is a tripartite agreement that is entered with the broker, sub-broker and the client. This agreement must be signed by all three parties. This will have to contain all the methods of functioning, areas of functioning, scope, fees, etc. Some of the best stock brokers have a number of sub-brokers under him because of the large number of clients. This agreement applies to all such sub-brokers and clients.