Any professionally 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 require a certificate of registration from the SEBI. They cannot deal in securities without this trading certificate. To date,
Trading Members of a Stock Exchange must work with the Sub-Brokers. This agreement details the trading member’s responsibilities, including ensuring that an active client does not act as the sub-broker.
Why are stockbroking 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 promotional emails. A sub-broker requires battling the odds of falling share prices, increasing skepticism, and increasing inflation rates in the country. The current scenario shows that it will be a challenging economy for stockbrokers and sub-brokers
in the coming years. Only the best sub-brokers in the current market will survive the market volatility trials. Sub-booking cannot be a whimsical hobby or a pastime. Several stockbrokers and sub-brokers in the country hold a secondary job due to unstable market conditions and infrequent client acquisitions. Still, it would help if you dedicated time and effort to learning about the stock market.
Holding a minimum educational qualification that gives insight into a stock market’s workings should help you in your brokering career. It would help if you also had professional certifications, including the NCFM certification. The presence of specialized certificates inspires confidence among your clients.
Having previous experience in the share market always helps move forward with sub-brokering. Courteous relationships with stockbrokers, 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 stockbroker, market trader, shareholder, and sub-broker. Therefore, if you have trained with a renowned broking company or interned with a sub-broker, you will have the 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 the next three months, you will require several things to strengthen your business. Here are the five essential things you must never forget if you want to become a successful sub-broker in
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 to open their accounts with new sub-brokers. However, they are hardly active, and you will end up with an unimpressive portfolio unless you are ready to go out there and acquire some loyal clients.
2. Foolproof infrastructure for your broking business
If an authorized person wants to acquire their clients traditionally, they will require an office. Most brokers now work online via dedicated trading platforms, eliminating the necessity for 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 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 will be challenging. You will likely not find a strong grip on the market without a few trusted names to fall back on. Authorized personnel with experience in the market perform better than novice traders who do not have access to a client list.
4. You need to learn the latest broking technologies
Broking is not all about market knowledge and the latest policies anymore. You need to know about software, recent technology, smartphone application programs, and the newest reporting tools to help you retain your resources.
You will require a thorough knowledge of the current market. This will include an understanding of the trends of share prices, declaration of IPOs, leading mutual fund investment opportunities, and a good idea about currency/commodity. Like any other business, a good brokerage firm requires a USP (unique selling proposition). It is a professional well-suited for those who like to embrace excitement and randomness in their professional life. In India, authorized sub-brokers are few because it is neither easy to become one nor to remain successful and popular for a long time.