How to Become Sub broker?

More on Sub-brokership

Are you someone who is looking to become a sub-broker? If yes, then you have reached the right place. Starting a sub-broker business is exactly like starting a new venture. And every venture requires nurturing. You have to put in your heart and soul into the work to make it successful.

One of the most important qualities of an entrepreneur is to be persevering and this is what is required for a sub-broker business as well. You have to have the zeal to learn new things and also a passion for what you do. If you’re someone who is passionate about everything money, stocks, finance etc. then this is the right profession for you.

A sub-broker is any individual who assists investors in dealing with buying and selling of securities and stocks. He or she is not a trading member of the stock exchange but someone who assists stockbrokers in delivering to clients. Being a sub-broker is a great financial profession and requires some capital investment as well.

How to Become Sub broker – Basics

If you are someone who is looking to become a sub-broker, make sure that you meet the basic criteria and an aptitude that is required to be a sub-broker. Your knowledge of financial markets and financial transactions has to be reasonably high.

If you do have some experience in these fields then that’s always an added advantage. Even if you do not know something, you should be willing to learn that.

When dealing in stock markets every piece of information is critical. Hence, just having knowledge about stock market transactions will not suffice alone. You should understand the political and economic climate of the country. Every new piece of news can have huge ramifications on the stock prices.

For instance, if there is any major scandal concerning the company, it’s stock prices can fall in a jiffy. United Airlines had a nightmare when a video surfaced online of the officials dragging an elderly person online after the flight was overbooked. People took to social media to express their outrage over the online and threatened to boycott their services in the future.

The shares of United Airlines plunged after this incident. Not surprising, right?

When such incidents happen the investors of that particular company, start anticipating what will happen as a result of the incident on the stock prices. They make assumptions and begin to take tangible steps in reducing their shareholding if they anticipate a fall in stock prices.

Ultimately, it is the quest for profits that drives the stock market. Isn’t it?

Next, you need to have basic knowledge of handling computers, and also have good communication skills. You have to service the clients and that requires good relationship building skills on your part. You have also understood that what is the goal of your clients to enter the market and you must ask them this question.

In India, only a miniscule amount of population invests in the stock market as compared to the US. You have to, as a sub-broker, be able to explain to your client why should they invest their money in stock markets and not keep it as a fixed deposit or any low-interest producing avenue.

Being a stockbroker, it requires a reasonable amount of capital, and if you do not have so much of capital then being a sub-broker is a viable option for you. You can always earn a fixed revenue by offering your services and clients to them.

Authorized Personnal Basics

To become a sub-broker now you no longer need to register yourself with SEBI as per new guidelines. You need to become an Authorized Personnel (AP) with a stock exchange. Both sub-broker and authorized personnel have the same operative functions and are technically the same things.

To be an Authorized Personnel you need not register yourself to the stock exchange. When you become an AP of a particular stockbroker, they will help you to facilitate the registration process.

To be an Authorized Personnel:

  • You should have passed 12th standard exams.
  • To be an AP for a stockbroker, you need basic documentation and need to pay the fee

If you are an AP then:

  • The number of demat accounts you open for a stockbroker by becoming their AP, they will share a percentage of brokerage charge with you. For example, in over-simplistic terms, if your stockbroker is making INR 100 brokerage daily then they will pay you INR 40 out of that revenue if a 40% brokerage has been decided initially. The brokerage that will be generated from that client is something that you will keep getting for a lifetime.
  • You will get a broker id and based on that you can refer customers and get them to open demat accounts for your stockbroking partner.
  • The more trader base you build, the more income you will generate and have for yourself.

Sub broker exams & courses

Here are some details on some of the exams and stock market courses you can go through in order to become a sub-broker:

1.NCFM (NSE Certification in Financial Markets)

To become a sub broker you can give this exam arranged by the National Stock Exchange (NSE). This is an online test and a certification program that tests an individual’s knowledge, and practical skills to operate in financial markets. This program is useful for beginners in the stock market to hone their skills.

NCFM certified people attract a lot of employers.

Various basic modules in NCFM:

  • Financial Markets: Beginners
  • Mutual Funds
  • Currency Derivatives
  • Equity Derivatives
  • Interest Rate Derivatives
  • Commercial Banking in Indian
  • FIMMDA- NSE Debt Market
  • Securities Market
  • Clearing Settlement and Risk Management
  • Banking Fundamentals – International
  • Capital Market Fundamentals – International

Besides basic modules, there are also intermediate and advanced modules. 

2. BCSM (BSE Certification on Securities Markets)

To become a sub broker, you can give this exam from BSE.  This exam ensures that you have basic knowledge of all stock exchange operations. This course is meant for those who want to become sub brokers, stock brokers, mutual funds, investors and DP’s.

Modules under this course:

  • Secondary market
  • Trading clearing and settlement
  • Rolling settlement
  • BOLT
  • Mutual funds
  • Tax provisions
  • Dematerialisation of shares
  • Surveillance
  • Sensex and other indices
  • Inspection of brokers books
  • Future and options
  • Ethics and code of conduct of brokers and sub brokers
  • Primary market
  • Book building and IPO’s
  • Listing
  • Investors grievance redressal system
  • Debt marketing and internet trading etc.

NISM Courses (National Institute of Securities Market)

To become sub broker you can enrol yourself in Nation Institute of Securities Market. This institute is there in order to educate investors, stockbrokers and sub brokers about the stock market.

Certification from NISM trains you on various modules that are required to deal in the financial markets. Some of the stockbroking firms have mandated a certification from the NISM to be able to deal in securities.

Hence, you will have to get NISM Series – VI: Depository Operation as well as NISM Series VIII: Equity derivatives certifications.

NISM Series VI – Depository Operations Certificate Examination: This is a 2-hour examination and costs INR 1500.

NISM Series VIII – Equity Derivatives Certificate Examination: This is also a 2-hour examination and costs INR 1500.

NSIM has various certification and PGDM programs as well.

Their full-time programs are:

  • PGDM Securities Market
  • PGDM Fintech
  • PGP in Securities Market
  • PGP in Quantitative Finance

They also have many part-time and joint programs as well.


How to become Sub broker – Expenses

Sub brokership requires capital expenditure along with working capital expenses.

Here are the capital expenses requirements:

  • Initial deposit is required to be made with stockbroker: This depends on the stockbroker. The typical expense here can range from INR 50,000 to INR 3,00,000
  • One time registration fee has to be paid to the stock exchange: This can be anywhere in between INR 15,000 to 20,000.
  • Other expenses required would be subjective: monthly office rental, computers/workstations, salaries. Internet connection, telephone connection, bills and other miscellaneous expenses.

How to become a sub-broker?

Coming back to the million-dollar question, how to become a sub-broker – here is the answer. The exam type can change depending on the broker requirements.:

  • To be a sub-broker, you need to clear NISM Series VIII – Equity Derivatives Certificate Examination. This is valid for 3 years, although, the exam type can change depending on the broker requirements.
  • Then you need to approach a broker and pay security money
  • You need to register for whichever segment you need to trade for a pay a fee for that
  • And with the logistical support from a stockbroker, you can start running your business with the broking partner.

Nonetheless, being a sub-broker is a profession that can mint you good money, if you understand what are the kind of compliances and requirements to do so. Taking courses and exams can help you to gain the requisite knowledge to do well in your business.

If you need any help in setting up your business in this direction of the stock market, let us assist you in taking the next steps ahead:

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