What is Sub Broker

A sub-broker, also known as an authorized person, is an intermediary in the financial market who operates under the supervision of a registered stockbroker or brokerage firm. They assist clients with various financial transactions, such as trading stocks, bonds, and other instruments, but do not have direct access to the stock exchange.

Sub brokers perform a range of important duties that enable investors to participate in the stock market with local assistance:

Facilitating Account Opening

Sub brokers guide clients through the process of opening a demat and trading account—collecting KYC documentation, submitting forms to the parent broker, and clarifying registration requirements.

Executing Trades

Clients instruct sub brokers to place buy or sell orders. The sub broker routes these orders to the parent broker, who executes them on exchanges like the BSE or NSE.

Providing Operational Support

They walk clients through platform functionalities, transaction statuses, clearing and settlement processes, and post-trade formalities.

Reporting and Documentation

Keeping clients informed about transaction confirmations, contract notes, and account statements is part of their service. Accuracy and timeliness are key.

Acting as a Liaison

In case of issues or grievances, sub brokers serve as the primary contact with the parent broker, helping resolve discrepancies or errors.

Here’s what sets both of them apart:

Here’s why opting for a sub broker can be beneficial for many traders:

Personalised Assistance

Sub brokers often belong to the same locality as their clients, offering face-to-face support that larger brokers may not provide.

Simplified Paperwork

For individuals who might struggle with the regulatory documentation, sub brokers streamline account opening and maintenance.

Formal Guidance

They explain market terminology, trading platform usage, and routine procedures—ideal for those new to investing.

Cost Efficiency

Most sub brokers charge marginally more than discount brokers but still offer affordable convenience compared to full-service intermediaries.

Sub brokers must be clear about their limitations:

• They cannot provide personalised investment advice or recommend specific stocks.
  

• They cannot guarantee returns, predict market trends, or claim to offer insider insight.
  

• They are not authorised to manage client funds directly.

These safeguards ensure compliance with SEBI guidelines and maintain clarity for investors regarding roles and responsibilities.

When evaluating sub brokers, consider the following:

• Registration and Affiliation: Verify that the sub broker is registered as an Authorised Person (AP) with the stock exchange and operates under a SEBI-registered broker. This ensures compliance with SEBI regulations and accountability.
  

• Transparency in Fees: Clarify upfront the commission structure and any additional charges.
  

• Scope of Services: Ensure they provide the level of support you need — from account opening to trade execution.
  

• Client Support: Look for responsiveness in communication and clarity in guidance.
  

• Accountability Path: Understand the channel for complaints — directly through the parent broker or via SEBI.

A little due diligence can safeguard against mismanagement and ensure a smooth trading journey.

This process ensures compliance, transparency, and operational simplicity for investors.

• Initial Meeting: You meet to discuss basic trading needs.
  

• Document Submission: You provide identity, address, and PAN documents for KYC.
  

• Account Opening: Demat and trading accounts are established through the parent broker.
  

• Platform Orientation: You receive guidance on the trading interface.
  

• Trading: You place buy or sell orders through the sub broker.
  

• Trade Confirmation: You receive contract notes and confirmations post-trade execution.
  

• Post-trade Support: Updates on clearing, settlement, and monthly statements.
  

• Ongoing Support: You receive operational assistance but not investment advice.

Here’s where sub brokers help:

• New to Trading: You may find it challenging to navigate online platforms or understand the stock market terminology.
  

• Preference for Local Touch: You value in-person support and a local point of contact.
  

• Need Simplified Management: Ease of paperwork and assistance with routine updates may be a priority.
  

• DIY Investors: You want to execute trades yourself but need operational help, not investment tips.

While sub brokers offer many benefits, be cautious about the following:

• Fee Transparency: Hidden or layered charges can affect returns.
  

• Limited Autonomy: Any grievances must be addressed through the parent broker, which could slow resolution.
  

• Advisory Missteps: Ensure they do not overstep into giving investment advice—this is strictly the broker’s domain.

Make sure the sub broker adheres to SEBI regulations and follows a professional code.

Sub brokers, also referred to as Authorised Persons (APs), are valuable allies for everyday investors needing guidance on procedural matters rather than investment strategy. While they offer convenience and a human touch, understanding their role and limits ensures a balanced relationship.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.