What is a Sub Broker? – Younger Brother of Stock Broker?

Sub Broker Meaning

A Sub Broker is similar to an Insurance Agent. 

What do insurance agents do?

They sell insurance to you and also help you with the claims, premium payments, etc. All in all, agents help the insurance company reach a larger audience.

How are sub brokers similar to an Insurance Agent? What is a Sub Broker Franchise? How much do they earn?

That’s exactly what you are going to learn today!

Let’s get started!

Content:

Who is a Sub Broker?

A sub broker is an agent of a broker, i.e., he introduces new clients to the broker. A sub broker gets a certain percentage of profit-sharing from the broker for introducing new clients. You can become a sub broker by obtaining a certificate of registration from the SEBI. It is mandatory for the sub broker to enter into an agreement with the broker as specified by SEBI. 

Check out How to become a Sub Broker here.

Sub Broker Franchise

You might have seen small stores of brands like PUMA, ADIDAS, etc., in your city. The Company PUMA or ADIDAS does not own these stores. They are owned by someone else in the form of the company’s franchisee that sells the same products as the Company PUMA or ADIDAS.

Well, the same goes with Stock Brokers. They have franchises owned by Sub Brokers.

The franchisee model exists because the stock brokers cannot have their presence in every city of the country. Generally, in this model, the broker sets up predefined infrastructure and territorial criteria.

So to own a sub broker franchise, you need to have an office space that meets the infrastructure criteria set by the broker. On the other hand, territorial criteria restrict the sub brokers to have only one franchisee in a specific territory, eventually helping the sub brokers gain more visibility.

The Sub Broker Franchise helps the clients in:

  • Account Opening 
  • Trading Terminals
  • Call and Trade Services
  • Resolving the Issues etc.

Online stock broking in India has revolutionized the overall stock broking industry, and Sub Brokership is no exception. Even the traditional brokers have almost discarded the franchisee model and opted for online sub broking models.

Example of online sub brokers: Online Stock Market Educators. These educators teach their students how to trade and encourage them to open an account with the partnered broker.

How Much a Sub Broker Earns In India?

Usually, Sub Brokers in India earn on a percentage sharing basis. Here’s how it works:

  • Sub broker introduces a client to the broker.
  • The client starts trading and starts paying brokerage to the broker.
  • The brokerage is split between the sub broker and broker on a percentage basis.

For a much better understanding, let’s take a look at an example: 

  • Mr. Prateek is a sub broker of Aliceblue India and has a brokerage sharing of 50%.
  • He introduces around 100 clients. These clients trade and pay an overall brokerage of ₹ 50,000 to the broker.
  • Then the broker will share ₹ 25,000 (50% of ₹ 50,000) with Mr. Prateek (sub-broker).

Click Here to Get Highest Brokerage Sharing in the Industry. Become an Aliceblue Sub Broker Today!

Can a Sub Broker Trade for Himself?

Yes, the sub broker can trade for himself and earn profits. In fact, it is pretty easy for the sub brokers to trade as they are dealing with the stock markets throughout the day.

Any Legal Restriction? 

A sub broker is not restricted from trading in the stock market. 

Difference Between Broker and Sub Broker

There are very few differences between broker and sub broker. The main difference is that the broker is a large entity, and a sub broker is a part of that entity that helps the broker reach a larger audience.

 BrokerSub Broker
MeaningThe broker provides trading services to its clients.Sub broker introduces new clients to the broker.
RegistrationThe broker is registered as a trading member of the stock exchange.Registered with SEBI as a sub broker.
Initial InvestmentHigh investment required.Low investment required.
BrokerageCharges brokerage directly from the client.Gets a certain part of brokerage from the broker.

Click Here to Get Highest Brokerage Sharing in the Industry. Become an Aliceblue Sub Broker Today!

Quick Summary

  • A Sub Broker is similar to an Insurance Agent. He introduces new clients to the broker.
  • Sub Broker Franchise helps the clients access trading terminals, open accounts, call and trade services, etc.
  • Sub broker earns money via brokerage sharing or by trading for himself.
  • A sub broker can trade for himself and earn profits in fact it’s quite easy for them as they deal with the stock markets throughout the day.
  • The main difference between a sub broker and a broker is: broker is a large entity, and a sub broker is a part of that entity that simply helps the broker to reach a larger audience.
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About Author

Vinayak Hagargi

Vinayak is Impressively Enthusiastic about Financial Markets, Research & Curating Layman-Friendly Content. He has been Successfully Contributing to the Financial Markets for over 2 years & has written over 100+ articles. He aims to continue sharing his knowledge to empower newbies with Relatable, & Easy to Understand Content.

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