Sub Broker Registration: A Complete Guide to Enrol Yourself

Sub-brokers are critical for the performance of the equity market. Most broking houses work on sub-broker franchise model to expand their business network. But, as the equity market structure is, the sub-brokers aren’t enlisted under the stock exchange, at least not directly. They are associated with stock broking agencies, who are members of the exchange. These agencies employ sub-brokers on commission basis to work towards increasing their business volume by sourcing new business and assisting existing clients with business decisions. But to operate as a sub-broker, one must obtain a Certification of Registration from SEBI, without which they aren’t permitted to operate in the market. 

So, what is sub-broker registration? And, if you want to start as sub-broker how to register yourself. 

SEBI has mandated it for all broking houses to sign an agreement with all its sub-brokers. This agreement details out the rights and responsibilities of the trading members and sub-brokers related to registration and business best practices. 

It specifies that sub-brokers without registration aren’t permitted to deal with securities and it is the responsibility of the trading members to confirm that all sub-brokers are follow registration norms. 

Enrollment process of a sub-broker 

Broking houses onboarding sub-brokers need to confirm that they complete sub-broker registration with SEBI, along with the prerequisites. 

Not anyone can become a sub-broker. Although educational qualification requirements aren’t high (one can join the rank after 10+2 as well), one must meet certain prerequisites, failing to which his/her application will disqualify. 

These prerequisites are related to meeting office space and infrastructure, financial requirements, certification and experience in trading, fitness norms under Schedule II of SEBI Regulations 2008, and such. 

Sub-broker registration process 

1. Members willing to enrol as sub-brokers can apply through an electronic platform. trading members can do so by visiting Sub-broker Master and clicking on ‘Fresh’ to register a new member.
2. Members must submit physical documents requested by SEBI within seven days of applying, or else, the application will get rejected. 
3. Member will receive a notification to make Rs 2,000 available on their Exchange Dues Account as application fees.
4. If there is any deficiency in the application, it will be sent back to the trading member for review and re-submission.
5. After processing the application, the exchange will intimate the trading member and collect SEBI registration fees by debiting Exchange Dues Account. 
6. The final step involves recognition from SRC or Stakeholders Relationship Committee. 

Sub-broker registration certificate is issued by SEBI and registration number and date made available to the trading member.

Sub-brokers who are already registered with SEBI don’t have to re-register if they enroll with another exchange. In that case, all they need to do is request to transfer their membership to the new exchange. 

Documents required for registration 

Supportive documents with your application ensure quick and complete process. Without the right documents, your application is likely to get rejected. So, here is the list of documents that you need to submit with your application form. The deadline given by SEBI to physically submit documents with the exchange is seven days. 

Address proof: SEBI mentions a list of address documents that it accepts as valid proof of address. These are, the latest electricity or telephone bill, valid ration card, passport, driving license, or latest bank statement.

Proof of experience: Sub broker registration process has made it mandatory to provide certification of experience in case applicant’s qualification is less than HSC.

Steps to follow after registration

• Update yourself with the code of conduct and bye-laws of the stock exchange that you have enrolled with.
• Pay the required application fees and annual charges on time.
• Adhere to Schedule II of Regulation which explains code of conduct.
• Maintain net worth as described under Schedule VI of Regulation

Conclusion

India has one of the best stock market indices that are also well-regulated. And, sub-brokers are recognised as key players in the equity market, playing the primary role of offering investment services and assistance to clients. Sub-broker registration is a critical step to confirm that the high level of integrity and transparency that SEBI aims at is conserved.