A stock broker and a sub‑broker (now commonly termed an Authorised Person in India) play different—but complementary—roles in the financial markets.
🧑💼 What Is a Stock Broker?
A stock broker (or brokerage firm) is a professional or company registered with SEBI and licensed by stock exchanges like the NSE and BSE. Here are the key functions of a stock broker, based on how they serve as your bridge to the market:
Key functions of Stock Brokers:
🛠️ Trade Execution
- They receive your buy/sell orders and place them on the exchange, ensuring execution at the best available price and speed (“best execution”).
- They handle all order types—market, limit, stop-loss, etc.—and oversee settlement (transferring shares/funds) .
📈 Market Research & Investment Advice
- Provide market analysis, stock research reports, and investment recommendations aligned with your goals and risk tolerance.
- Especially full-service brokers offer personalized advice, while discount brokers offer limited or no advisory support
🗂 Portfolio Management
- Some brokers manage and rebalance your investment portfolio, choosing assets based on your financial objectives.
- They can also oversee risk-diversification strategies
🧾 Account Administration & Technical Support
- Handle KYC, account opening, paperwork, and record maintenance.
- Provide and support online trading platforms, resolving technical issues
⚖️ Compliance & Regulation
- Abide by SEBI and exchange rules, ensuring best execution, KYC, AML checks, and transparency.
- Maintain ethical standards and manage potential conflicts of interest
📣 IPO & New Issues Access
- Help clients participate in IPOs and primary market offerings, giving early access to new securities
📚 Education & Client Support
- Offer training, webinars, and market updates, helping investors build knowledge .
- Provide regular portfolio reports, performance tracking, and responsive support
🤝 What Is a Sub-Broker (Authorised Person)?
A sub‑broker is an agent or franchise partner appointed by a stock broker to serve clients locally in areas where the broker may not have a direct presence. Important details:
Key functions of Stock Brokers:
Client Acquisition & Onboarding
- They attract new investors via local networking, seminars, and promotion, expanding the broker’s client base.
- Assist clients in opening Demat and trading accounts, guiding them through KYC and documentation
Order Placement & Execution
- Receive and transmit buy/sell orders from clients to the main broker’s trading system, ensuring timely trade execution.
- Serve as the local point of contact, updating clients on order status.
Client Servicing & Support
- Provide post-trade customer support, troubleshoot issues, and ensure overall client satisfaction
- Organize training sessions, webinars, or workshops to help clients navigate trading platforms
4. Advisory & Market Insights
- Offer general investment advice, market trends, and stock tips (within regulatory limits)
- Conduct basic market research on instruments and sectors to help clients make informed decisions
5. Compliance & Documentation
- Ensure clients comply with SEBI/KYC/AML norms, verify identity, and maintain accurate records
- Disclose that they act as an agent of the broker, adhere to fair practice rules, and follow contract stipulations .
6. Risk Mitigation & Portfolio Guidance
- Help clients set realistic goals, diversify portfolios, and use tools like stop-loss orders .
- Assist with margin management, advising on appropriate leverage
7. Reporting & Record Maintenance
- Prepare and share transaction records, portfolio statements, and periodic performance updates
- Coordinate with the main broker to compare and reconcile trades, ensuring accuracy
A Sub‑Broker is the local representative and client facilitator for a registered stock broker. They handle everything from client acquisition and trade placement to advisory, compliance, and record-keeping—playing a vital role in enhancing client experience and expanding market reach.
📋 Quick Comparison
| Feature | Stock Broker | Sub‑Broker / Authorised Person |
|---|---|---|
| SEBI Registration | Broker- registered member (SEBI + Exchange) | Authorised Person- registered via broker |
| Trade Execution | Executes trades on exchange directly | Sends client orders to broker’s system |
| Client Interface | Provides advisory, portfolio management | Focuses on acquiring and guiding clients |
| Revenue Model | Charges brokerage & fees to clients | Earns commission share from broker |
| Capital Required | High (capital & infrastructure) | Low to moderate, broker bears major cost |
| Regulatory Role | Full compliance & legal responsibility | Functions under broker’s license |
✅ So, what’s the difference?
- A stock broker is the primary, licensed entity that executes trades, manages portfolios, and offers advisory services directly on exchanges.
- A sub‑broker (Authorised Person) is a regional or local extension of the broker—they bring in clients, assist with accounts and support, but don’t trade directly.
“This is general information only and not financial advice. For personal guidance, please talk to a licensed professional.”
