How Much Sub-Brokers Earn In India?

A sub-broker or an Authorised Person (AP) is a security market professional who is an intermediary between a stockbroker and an investor. A stockbroking agency recruits such individuals to assist investors with services, including portfolio management, investment advice, research reports and more. In return for such services, they receive a certain amount as commission, which is their primary source of income.

If you are curious about how much sub-brokers earn, read this article and explore their role, factors that impact their income and how much they earn in detail.

What is the Role of a Sub Broker?

A stockbroking agency, or simply a stockbroker, is a certified organisation or individual that bridges the gap between stock exchanges and investors like you by acting as an intermediary.

On the other hand, sub-brokers act as intermediaries between stockbrokers and investors. They work under the supervision of a stockbroker firm to provide investment services to a larger client base.

Such professionals help execute trade orders for you, offer you financial guidance and more. However, such a professional must have proper registration, especially from the SEBI, to operate.

What Factors Affect a Sub-Broker’s Income?

Before learning how much does a sub-broker earn in India, let us understand the factors that impact their earning from commissions:

• Commission Structure

  A sub-broker earns from commission by executing trade orders mainly. This rate of commission is not fixed. Depending on the stockbroking agencies, the commission of brokers varies. Therefore, such brokers must analyse which firm offers the most for the most earnings.

• Volume of Trades

  Another factor that impacts the earnings of such brokers is the number of investors or clients they handle and their trade volume. Some stockbroking agencies focus on highly active investors, while some might prioritise having a large client base. Whatever strategies a firm follows, a sub-broker earns more commission if the trading volume is high.

• Additional Services

  While working for a stockbroking agency, such brokers not only earn from executing trades but also from additional services. These services include investment consultation, portfolio management, tax planning, etc. This combination of trades and add-on services provides more income to such brokers.

• Market Experience

  Practical experience in the market with a proper reputation is another important factor in boosting overall earnings. A reputed sub-broker can help increase the client base of a stockbroker, and experience allows for a higher commission compared to a new sub-broker.

• Type of Traded Assets

  Asset types are another determining factor for the commissions of such brokers. Its rate might vary between securities, such as derivatives, equities, commodities, etc.

How Much Sub-Brokers Earn in India?

If you are looking for an answer to the question of how sub broker make money, their income is based solely on commissions. However, stockbrokers might follow one of the following commission structures:

• Percentage Method

  Most stockbroking agencies pay such individuals a percentage after the successful execution of trades. Generally, it ranges between 50% and 60%. Suppose a brokerage firm imposes a 0.5% brokerage on you, and upon purchasing or selling securities of 100 shares of INR 2000, you pay INR 1000 as a brokerage. Thus, a sub-broker receives INR 500 or INR 600 as commission.

• Lumpsum Method

  Few stockbrokers follow a lump-sum method to pay their APs. Here, the APs receive a fixed amount per transaction as commissions, irrespective of the trade volume. Assume a stockbroker pays INR 50 as a commission, and if a sub-broker executes 500 transactions on your behalf, they earn INR 25,000.

• Combination

  Some stockbroking agencies use a combination of percentage and lump sum for their APs. In this method, a percentage method works up to a predetermined threshold, and after that threshold, the lump-sum method applies.

Conclusion

If you want to learn how much sub-brokers earn, you must know that their earnings are commission-based. They mostly earn from executing trades successfully. Adding new investors, providing investment services, etc., increases their income potential. Depending on commission structures, stockbrokers might pay them by percentage, lump sum or a combination of both.

FAQ’s

1. What is the average income of a sub-broker in India?

Depending on the stockbroker, an AP earns from commission by executing your trades and providing you with additional services. Their earnings in India lie between INR 50,000 and INR 1,00,000.

2. How is a sub-broker’s earnings calculated?

Commission structures for such brokers depend on stockbroking agencies. Most agencies pay between 50% and 60% of brokerage charges that they levy from investors. However, others might follow a lump-sum or a combination method.

3. Do sub-brokers earn a fixed salary or commission-based income?

Such brokers do not have a fixed income, like a salaried individual. They earn commissions by executing trades, adding investors to their clientele, and providing additional services.

4. How much commission does a sub-broker receive on each transaction?

Depending on the stockbrokers, the income of these brokers can vary. Suppose a stockbroker follows a percentage-based commission model and pays a 50% commission on trade executions. When you pay a brokerage set by the agency, they get 50% as a commission from it.