Any professional trained individual who acts on behalf of a trading member can be a sub-broker. They are not Trading Members of the Stock Exchange and they require a certificate of registration from the SEBI. They cannot deal in securities without this trading certificate. Till date, it is imperative for Trading Members of a Stock Exchange to work with the Sub-Brokers. This agreement details the responsibilities of the trading member, including the responsibility of ensuring that an active client does not act as the sub-broker.
Why are stock broking and sub broking professions for the brave?
Becoming a sub broker requires an appetite for the unpredictability and risks of a share market. It is not an easy desk job that requires handling a limited number of client calls and sending out promotional emails. A sub broker requires battling the odds of falling share prices, increasing scepticism and increasing rates of inflation in the country. The current scenario makes it apparent that it is going to be a challenging economy for stock brokers as well as sub brokers in the coming years. Only the best of the best sub brokers in the current market will survive the trials of the market volatility.
Sub broking cannot be a whimsical hobby or a pastime. Several stock brokers and sub brokers in the country hold a secondary job due to the unstable market conditions and infrequent client acquisition, but you will need to dedicate your time and effort in learning about the stock market. Holding a minimum educational qualification that gives you an insight into the workings of a stock market should help you in your brokering carrier. You should also hold professional certifications including the NCFM certification. The presence of specialized certificates inspires confidence among your clients.
Having some previous experience in the share market always helps in moving forward with sub brokering. Courteous relationships with stock brokers, old clients and shareholders can help you establish new contacts with fresh trading groups and potential clients. The share market is an intricate network that connects each stock broker, market trader, share holder and sub-broker. Therefore, if you have trained with a renowned broking company or interned with a sub broker, you will have an upper hand while setting up shop.
What will you need to open a new successful sub broking business?
Apart from an impressive capital that can see you through for the next three months, you will require a number of things to strengthen your business. Here are the 5 essential things you must never forget if you want to become a successful sub broker in India –
1.You will need a loyal client base
A dedicated client base will define the success of any authorized person. Friends and families are the first people who come and open their account with new sub-brokers. However, they are hardly ever active and you will end up with an unimpressive portfolio unless you are ready to go out there are acquire some loyal clients.
2.Foolproof infrastructure for your broking business
If an authorized person wants to acquire his or her clients in the traditional way, then he or she will require an office. Most brokers now work online via dedicated trading platforms and that eliminates the necessity of a dedicated office. It also saves a fortune in terms of office setup and employee overheads.
3.Your contacts and professional relations
Maintaining A good connection with the existing online brokers and traditional brokers (start building your rolodex right now) will pay you in the long run. Stepping into the world of share broking and stock trading without a feather in your cap is going to be challenging. Without a few trusted names to fall back on, you will likely not find a strong grip in the market at all. An authorized personnel, who has experience in the market, perform better, as compared to the novice traders, who do not have access to a client list at all.
4.You need to learn the latest broking technologies
Broking is not all about market knowledge and latest policies anymore. You need to learn about software, recent technology, smartphone application programs and the latest reporting tools that can help you retain your resources.
5.Sub brokers need to update their facts of the share market
You will require a thorough knowledge of the current market. This will include a knowledge of the trends of share prices, declaration of IPOs, leading mutual fund investment opportunities and a good idea about currency/commodity.
Just like any other business, a good brokerage firm requires a USP (unique selling proposition). In India, authorized sub brokers are few in number because it is neither easy to become one, nor is it easy to remain successful and popular for a long time. It is a professional well-suited for those, who like to embrace excitement, and randomness in their professional life.