What is Sub Broker in Share Market?

The rapid development in the financial market has created multiple opportunities for individuals. In addition to investing in securities, many individuals and organisations are making a profit by investing via a Demat account.

In FY2025, the Indian capital market witnessed a record-breaking opening of 41.1 million new accounts. Online brokers and sub-brokers have played a pivotal role in this. This blog discusses what is sub-broker, its examples, and the advantages of becoming a sub-broker.

Who is a Sub Broker?

Just like stockbrokers act as middlemen between investors and the stock exchanges, a sub-broker acts as an intermediary in the financial markets between a broker and an investor. They work under the supervision of a registered broker and assist clients in various tasks, such as financial transactions and paperwork.

To start their operations in the market, they need authorisation from registered stockbrokers and abide by the rules of the Securities Exchange Board of India (SEBI). From managing investor portfolios to executing trades, sub-brokers must maintain accurate records and ethical practices.

Sub-brokers earn money by levying charges and commissions on each transaction of the investors or clients. Depending on the broker, these charges can be flat or a certain percentage of the volume of the transaction.

Example of a Sub Broker

Let us use an example to understand what is sub-broker in share market more deeply. X wants to invest in the stock market but is unable due to a lack of direct market access. He has to contact Y, who is a registered sub-broker under a stockbroker. Using its regulatory compliance and resources, Y helps X execute trades in the market by charging a commission.

Roles and Responsibilities of a Sub Broker

Sub-brokers play a pivotal role in the capital markets as they are responsible for a variety of tasks with financial expertise and regulatory awareness. Below are the roles and responsibilities of a sub-broker:

• Communication With Clients

  Sub-brokers ensure effective communication with various clients. They also offer investment opportunities, portfolio performance services, and provide market updates.

• Trade Execution

  Sub-brokers execute trades using the strategies of investors on their behalf. This helps investors or other individuals who want to invest in the stock market but are unable due to a lack of access.

• Receiving Commission

  Sub-brokers receive payment from each customer transaction in return for their services to brokers. The complexity of the market and the trade size determine their commission.

• Offering Various Services

  Apart from executing trades, registered sub-brokers offer a lot of services such as portfolio management, stock recommendations, and making research reports for clients.

• Risk Assessment

  Since risk is a crucial factor in the stock market, sub-brokers also conduct risk assessments considering investors’ risk tolerance and financial goals.

• Regulatory Compliance

  Sub-brokers also adhere to the SEBI guidelines and comply with financial regulations for all transactions.

• Market Analysis

  Sub-brokers continuously analyse markets and provide investment recommendations to investors to avoid losses.

What are the Differences Between a Sub-Broker and a Stockbroker?

Although working in the same domain, stockbrokers and sub-brokers function differently. The table below differentiates between a sub-broker and a stockbroker based on some parameters:

Advantages of Becoming a Sub Broker

Sub-brokers earn money by executing client trades. This ensures their career growth and enhances credibility. Have a look at the following benefits of becoming a sub-broker:

• Access to Resources

  Sub-brokers can access market reports and research tools provided by the stockbrokers. Using these resources can help them make informed investment decisions and enhance their ability to serve clients.

• Financial Knowledge

  Gaining financial knowledge is one of the main benefits of becoming a sub-broker. You can get essential financial information regarding the stock market and trading while working under a broker.

• Commission Earnings

  Sub-brokers earn commissions for each trade made by clients. This is a lucrative and steady income option if you have a large client base and high trading volume.

• Low Investment

  In the initial phase, sub-brokers need comparatively low investment compared to established brokerage firms. You need a small investment amount of INR 10,000 or something above, to begin your career as an authorised partner or a sub-broker.

• No Direct Exchange Access Required

  Sub brokers do not require direct access to the stock exchanges that a stockbroker needs. This can rescue your entry barrier as they do not have to maintain strict guidelines and requirements.

How to Become a Sub Broker?

Now that you understand who a sub-broker is, you must also know how to become one. Follow the pointers below to become a sub-broker and avail benefits like accessing resources and earning commissions:

• Educational Qualification

  You need a 10+2 degree to become a sub-broker in India, which is mandatory. A bachelor’s degree in commerce, finance, or another relevant field is also necessary.

• SEBI Registration

  You must be registered under the SEBI as a sub-broker or authorised partner. You must adhere to all SEBI guidelines and regulations to become one.

• Contacting a Stockbroker

  Start contacting a stockbroker to make the initial step in your sub-broker journey. Taking guidance from a stockbroker makes you learn the onboarding and application procedure.

• Compliance

  It is mandatory to comply with the regulatory requirements to start this profession. You must adhere to the rules and regulations of regulatory authorities to make your clients feel free to use your services.

• Making an Agreement

  Sub brokers must complete the application form and sign the agreement with a broker after the compliance. Submitting this form clarifies your terms of partnership.

• Licensing

  You need to get licensed by obtaining the National Institute of Securities Markets (NISM) certification. One such certification is NISM-Series-X-A.

Final Thoughts

A sub-broker acts as a middleman between a broker and an investor in the financial markets. In return for executing trades for clients and maintaining communication, they charge a commission as earnings. You need to get registered with the SEBI, ensure compliance, and complete the licensing procedure to become a sub-broker.

Do you want to start your investment journey and receive multiple services related to investments? Download the application of PL Capital Group – Prabhudas Lilladher and open a Demat account for free!

Frequently Asked Questions

1. How does a sub-broker earn?

Sub-brokers earn by charging fees for each transaction of clients as a commission. It is a portion of the total brokerage charge that a broker levies from a client.

2. What is the function of a sub-broker in trading?

Sub-brokers in trading work as an intermediary between stockbrokers and investors. They help clients trade in securities without being direct exchange members.

3. What are the eligibility criteria to become a sub-broker?

To become a sub-broker, you need to have a 10+2 degree and a bachelor’s degree in finance or commerce. Furthermore, you have to get registered with SEBI to start working in this profession.

4. What is the difference between a sub-broker and a stockbroker?

A stockbroker executes trades for clients, whereas a sub-broker works as a middleman between a stockbroker and clients. In addition, stockbrokers must be registered with SEBI. However, sub-brokers need registration from the stock exchange, SEBI and the stockbrokers.