The Indian stock market has witnessed exponential growth over the last decade, supported by technological advancements, increased financial literacy, and the emergence of discount brokers. With more retail investors participating in trading and investments, the demand for reliable intermediaries has surged — opening up opportunities in the sub broker business model, also commonly referred to as the Authorised Person (AP) model. This model has emerged as a lucrative entry point for individuals and businesses wanting to enter the broking ecosystem without the need to acquire a full broking license.
Who is a Sub Broker or Authorised Person?
A sub broker is an individual or firm that acts on behalf of a registered stockbroker to provide trading services to clients. In the current regulatory framework governed by the Securities and Exchange Board of India (SEBI), the term “sub broker” has been replaced with “Authorised Person”. However, both terms are still used interchangeably in the industry.
Authorised Persons are essentially appointed by SEBI-registered stock brokers to offer trading and investment services to clients. They can assist clients with account opening, market insights, investment recommendations, and after-sales services — all while operating under the regulatory umbrella of a full-service broker.
How the Sub Broker Business Model Works
The sub broker business model is built on a partnership between the stockbroker and the authorised person. Here’s how it typically functions:
- Onboarding and Agreement: The individual or firm interested in becoming a sub broker enters into an agreement with a registered stockbroker. This agreement includes the scope of operations, revenue sharing structure, roles, and responsibilities.
- Registration and Compliance: Once onboarded, the authorised person must be registered with the relevant stock exchange(s), complying with KYC norms and other documentation processes laid out by SEBI and exchanges.
- Client Acquisition: The primary role of a sub broker is to acquire clients for the broker’s trading platform. This includes educating clients about the market, helping them open accounts, and assisting in their trading or investment activities.
- Revenue Sharing (Commission Model): Sub brokers earn through a commission-sharing model. A certain percentage of the brokerage earned from the clients referred by the sub broker is shared with them. This structure creates a recurring income stream based on client activity.
- Technology and Infrastructure: Most brokers today offer sub brokers a ready-made digital infrastructure — from mobile trading apps and dashboards to CRM tools and marketing support. This ensures smoother onboarding and client retention.
Why the Sub Broker Model is Gaining Popularity
Several reasons contribute to the growing appeal of the sub broker or authorised person model:
- Low Entry Barrier: Unlike setting up a full-fledged brokerage firm, the sub broker model requires significantly less capital and compliance burden.
- Recurring Income: Sub brokers can generate continuous income through brokerage sharing as long as their clients remain active.
- Brand Leverage: Working under a reputed stockbroker allows sub brokers to leverage the broker’s brand name, trust, and digital tools.
- Growth Opportunities: With consistent performance, sub brokers can expand their client base, hire relationship managers, and even operate like mini-franchises.
Choosing the Right Broker to Partner With
A critical decision for any aspiring sub broker is choosing the right principal broker. Today’s competitive market is dominated by several top players, such as Zerodha, Groww, Upstox, and mStock by Mirae Assets. Each platform offers unique benefits, and comparing them is essential before forming a partnership.
For instance, mStock broker offers zero brokerage on delivery and competitive pricing models on intraday and F&O trades, making it attractive to cost-conscious traders. Its digital-first approach and brand trust from Mirae Assets allow sub brokers to cater to tech-savvy investors without worrying about backend support. While mStock’s pricing and tools make it appealing, competitors like Zerodha and Groww also offer wide client bases and powerful APIs, making it a choice between tools, revenue share, and support.
Key Advantages of Becoming a Sub Broker
- Flexibility and Independence: Sub brokers can manage their own clients and build a business on their terms.
- No Licensing Hassle: There’s no need to obtain direct SEBI membership, making it easier to enter the stockbroking ecosystem.
- Access to Training and Marketing Tools: Most brokers provide partners with marketing material, regular training, and sales support.
- Low Infrastructure Cost: Many brokers offer plug-and-play online platforms, reducing the need for physical office space or tech development.
Things to Keep in Mind
- Due Diligence: Carefully review the agreement, commission structure, support services, and technology stack of the broker before joining.
- Compliance Responsibility: As an authorised person, you must ensure your clients comply with KYC and trading norms.
- Client Servicing: Long-term business success depends on how well you support and retain clients.
Conclusion
The sub broker or Authorised Person model is an excellent opportunity for aspiring entrepreneurs, finance professionals, and even existing financial advisors to grow in the stock market ecosystem. With increasing investor participation and the digitisation of broking services, this model offers scalability, steady income, and the chance to build a reputable client network. Choosing the right broker partner — whether it’s mStock by Mirae Assets, Zerodha, Groww, or Upstox — is crucial to long-term success in this thriving business opportunity.
If you’re passionate about finance, understand the markets, and have a client-focused mindset, now is the perfect time to explore the sub broker business model and begin your journey in the evolving world of financial services.
