What Is The Difference Between A Broker And A Sub Broker?

A stockbroker can either be a registered stockbroking company or an individual. They buy and sell securities on their client’s behalf and charge brokerage fees. They act as a vital link between investors and the stock exchange by facilitating transactions. To understand the difference, here are the types of stockbrokers:

• • Full-Service Stockbrokers:

  These stockbrokers provide comprehensive services to clients, including advisory assistance. They can help investors gain insight into investment opportunities. 

  Their brokerage fees are typically based on the total amount of executed trades. These are generally well-established market players with various network offices/branches nationwide.

  • Discount Brokers:

  They charge comparatively lower fees than full-service brokers. Their services don’t include advisory assistance or market research to help clients zero in on a suitable investment opportunity. Usually, they charge a flat fee for undertaking stock market transactions.

  • Brokers Charging Flat Brokerage:

  These stockbrokers have gained popularity because of the increasing use of digital technology in trading. They are a mix of both full-service and discount stockbrokers, charging a flat rate brokerage fee.

Who is an Authorised Partner?

Now that you understand the difference, the Authorised Partner is the next factor. An authorised Partner(Authorised person) is an agent of a broker working with the client on their behalf. They act as a link between the stockbroker and the client. A stockbroker entrusts the Authorised Partner with multiple responsibilities, like sourcing clients, providing services, and managing clients. Authorised Partners receive a portion of the fees collected by the stockbroker. 

The difference extends to the fact that stockbrokers can have a wide network of operations across the country via different Authorised Partners, who identify and acquire new clients for the stockbroker. Now that you know what an Authorised Partner(Also known as an Authorised person) is, the next step is to understand in detail the difference through a comparative analysis:

What is the Difference Between a Broker and a Authorised Partner in the Share Market?

• Broker Vs Authorised Partner Function:

A stockbroker functions independently, while an Authorised Partner acts as an intermediary between the main stockbroker and its clients. An Authorised Partner is primarily responsible for expanding the original stockbroker’s business network. 

Stockbrokers usually also act as Depository Participants (DPs) of the National Stock Exchange’s (NSEs)-promoted National Securities Depositories Ltd (NSDL) or the Bombay Stock Exchange’s (BSEs)-promoted Central Depositories Securities Ltd (CDSL). Here, you must remember that both depositories maintain stocks and securities electronically. On the other hand, an Authorised Partner cannot be a DP.

• Stockbroker vs Authorised Partner Registration:

A stockbroker has to be registered with SEBI. While initially, Authorised Partners were also to be registered with the SEBI, since August 2018, the market regulator has discontinued Authorised Partners as a category for registration. In its circular dated August 3, 2018, all existing Authorised Partners had to migrate to the ‘Authorised Person compulsorily category.’ According to the SEBI, an Authorised Person can be an individual, firm or other entity which is appointed by a stockbroker. These can provide access to a stock exchange trading platform by acting as a stockbroker’s agent.

• Broker Vs Authorised Partner Revenue Sharing

Authorised Partners have a wide range of responsibilities, entitling them to a higher share of revenue generated by clients. Though the main stockbroker gets a smaller share of the revenue, it has access to overall large revenue generated by scores of Authorised Partners.

Also read, How Much Authorised Partner Earns in India?

• Stockbroker vs Authorised Partner Brokerage

Stockbrokers are allowed to charge brokerage fees directly from clients, while Authorised Partners are not. Authorised Partners receive a specified portion of the revenue from the stockbrokers.

• Broker Vs Authorised Partner Importance:

Stockbrokers play a vital role in the stock markets by ensuring sufficient liquidity availability. They have a key place in the capital markets ecosystem. Authorised Partners, on the other hand, are vital for stockbrokers to expand their businesses across regions. 

A stockbroker allows new people to enter the financial market as agents by providing access to the stockbroking firm’s cutting-edge trading tools and other services. Authorised Partners typically have to pay the stockbroker a deposit fee.

Conclusion

Thus, while investing in stock markets, it is essential to know the what is the difference between a broker and an Authorised Partner. Both play a distinct role in the functioning of stock markets. They share some common features as well as differences. While beginning your investment in stock markets, always rely on a trusted and reliable financial partner. Look for features such as an all-in-one trading platform to invest in different stock market options, brokerage cashback and zero Demat AMC for up to a year.