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Stock Market: No Fresh Sub-Broker Registration, Now Only Authorized Person

By SiliconIndia   |   Friday, August 10, 2018
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Stock Market: No Fresh Sub-Broker Registration, Now Only Authorized Person

SEBI has taken the final decision to discontinue sub broker category or sub broker business model across India. The main reason behind this decision is to lower the compliance cost. The sub brokers act as intermediaries is in the capital market, due to which the cost increases.

There will not be any fresh issue of sub-broker registration, but those who already have opted sub-broker or are already a sub-broker will have to migrate Authorized Person business model, by end of current fiscal year, till March 31, 2019. The existing sub brokers must clear all the pending renewal fees to Securities and Exchange Board of India (SEBI). The market regulator has taken this action to reduce the extra burden and compliance cost.

But still there is no difference between the sub broker and the authorized person model, in terms of their operative role.

If You are already a Sub-Broker:

The current sub-brokers will have to register with the market regulator and migrate to Authorized Person business model, by fulfilling all the terms and conditions. This new process will make it easier in dealing with securities and assisting the investors.

According to SEBI, all the pending sub broker applicationfor registration will be returns to their respective stock exchanges, which will be further connected by the applicant.

Any existing sub broker not eligible or fulfill the criteria to become Authorized Person in derivative segment, they might have to register in cash segment to run their business.

The existing sub brokers who do not want to migrate to Authorized Person business model would be asked to surrender their sub broker registration with SEBI, after 31st March 2019.

Top 5 most Profitable Authorized Person Business:

Below listed broking houses are also the most reputed & profitable. These companies areamong the Full Service Brokers that provides wide range of products and services and open maximum number of Demat and Trading Account in this industries. Their Revenue Sharing Model and Brokerage Plans are best in the industry and are designed in a way to generate more brokerage revenue and hence more profit to the broking house and the authorised person.

In case of Discount Brokers, where the brokerage is generated on flat fee of Rs 10- Rs 30 per transaction. The amount of brokerage generated per transaction, in discount broker is very less compared to the brokerage generated in full service brokers.But the number of transactions through intraday trading is more in discount broker as compared to any other full service brokers.

According to SEBI, many previous sub brokers have migrated on a large scale to authorized person business model, in the last 5 years. The data shows a gradual decline in the number of sub brokers.

The existing sub brokers with good experience and knowledge of stock market, have the opportunity to become a trading member, if only they fulfill all the terms & conditions prescribed by the market regulator.

With time, it has been seen a decrease in registration numbers into currency and equity derivative segment. There is a gradual increase in the number of investment advisors and research analysts.

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