BAJAJ BROKING
You may be aware that it is something of a challenge to conduct transactions on the stock market without any external help. Several investors employ the aid of brokers (stockbrokers) to do this. Apart from brokers, you may have heard of sub-brokers. They can also effectively help you to conduct transactions. Brokers may help you with a gamut of things like recommendations for investment as well as suggestions for gainful returns and this will boost your financial portfolio.
Brokers have enough expertise to navigate the trading and investing world. However, sub-brokers may also portray expertise. So, what is the difference between a broker and a sub-broker? Surely there must be some differences as they may function in different ways and conduct different operations. The first thing to do in finding out how a broker is different from a sub-broker is to clearly define what the two distinct terms mean.
You could say that a stockbroker is a crucial component of the ecosystem that makes up capital markets. In the simplest terms, a stockbroker is a company or an individual that conducts trading activity – executes purchase and sale orders – for investors on the investors’ behalf. Stockbrokers may have a wide customer base. They charge a brokerage fee which is typically a percent of the whole value of funds that are invested by investors. The brokerage fee that is charged may be called a “commission”.
Now that you know what it means to be a stockbroker, you are halfway to knowing the difference between a broker and a sub-broker. Essentially, there are two main kinds of brokers. Full-service brokers offer investors a wide range of investment products and related services. They also charge higher in terms of commissions. The other kind of brokers, discount brokers, charge lower fees and may not offer many of the services that full-service brokers do. Yet another category of brokers has emerged in recent times – hybrid brokers. These are brokers that provide investors with a combination of services of a full-service broker and a discount broker but charge a flat and fixed fee. Here, whatever services investors may opt for, the fee is predetermined and has to be paid. It is not a percentage of any funds in an investor’s account.
The Securities and Exchange Board of India eliminated the category of “sub-broker” in 2018, and now, the sub-broker, for all purposes, is called an authorised person. However, in this article, the term will be used interchangeably as it so often is. Hierarchically, the sub-broker is technically an agent of the stockbroker. You could say that the sub-broker serves as an intermediary between a client and a stockbroker. Consequently, a sub-broker may be responsible for sourcing clients, any extra research undertaken, and the management of clients. The sub-broker receives a percent of the stockbroker’s fee as a commission for services rendered. Here lies the key broker and sub-broker difference, in terms of the work done and fee received.
While comparing a stockbroker and a sub-broker, you could say that a single stockbroker has a presence in different parts of the country via their partners, the sub-brokers. They could be called “agents” that bring in new business to the stockbroker by the acquisition of new clients in their region.
The functions of both a stockbroker and a sub-broker may overlap, but there are some distinct points of difference based on the parameters mentioned below:
The difference between a broker and a sub-broker must be clear to you by now. Although brokers may be more important than sub-brokers, you should know that sub-brokers have equal importance, While brokers play a pivotal role in the capital markets, and are a relevant part of the supply chain comprising exchanges, companies, sellers, buyers, and other stakeholders, sub-brokers are integral too. They provide brokers with all the important information they need. They also potentially link clients to brokers and manage and maintain the business after a client base is created.
In general, both brokers and their agents, sub-brokers, have to have a wide network of contacts to generate business and source new clients. They also have to gain an edge over the competition and maintain a client base. Sub-brokers may have more connections to clients at the ground level and report progress to brokers regularly. Brokers may benefit from joining hands with an appropriate broker that already has a large client base. Either way, both can have a fruitful business relationship that can last for years to come.
* Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only*
Share this article:
7th Pay Commission Leave Rules & Holidays in India
11 Dec, 2024 | 5 Min. read
Wipro Ltd
11 Dec, 2024 | 7 Min. read
Aditya Birla Group
11 Dec, 2024 | 10 Min. read
What is the Lock-in Period in IPO
11 Dec, 2024 | 6 Min. read
Textile Sector in India
11 Dec, 2024 | 11 Min. read
Step-by-Step Guide to Accessing Your Income Tax Assessment Order Online
11 Dec, 2024 | 3 Min. read
IPO vs FPO vs OFS: Key Differences in How Companies Raise Capital
11 Dec, 2024 | 8 Min. read
Gold Price in India - Gold Prices Edge Higher as Futures Hit $2,654.50
11 Dec, 2024 | 39 Min. read
Indian Overseas Bank Secures ₹1,359 Crore Income Tax Refund for AY 2015-16
11 Dec, 2024 | 2 Min. read
HG Infra Secures ₹899 Crore NH-227B Road Upgrade Project in UP
11 Dec, 2024 | 2 Min. read
NTPC Green Energy Secures 500 MW Solar Project with 250 MW ESS from SECI
11 Dec, 2024 | 2 Min. read
Awfis Space ₹583 Crore Block Deal Launches at ₹680 Floor Price
11 Dec, 2024 | 2 Min. read
RBI Launches ULI: Transforming Loan Access
August 27, 2024 | 4 Min. read
Textile Sector in India
September 20, 2024 | 5 Min. read
List of IPOs with DRHPs Filed
November 30, 2023 | 3 Min. read
Aditya Birla Group
September 28, 2023 | 10 Min. read
Bajaj Housing Finance Ltd IPO: Things Smart Investors Need to Know
September 05, 2024 | 4 Min. read
Budget Stock Ideas 2024-2025 | Stocks to Buy Today
July 24, 2024 | 4 Min. read
IPO Eligibility Criteria : Full Details
March 15, 2024 | 6 Min. read
What Is the Lock-In Period in IPOs?
October 18, 2023 | 6 Min. read
Godfrey Phillips Announces 2:1 Bonus Shares
September 16, 2024 | 7 Min. read
Jindal Group- A Comprehensive Analysis
September 27, 2024 | 7 Min. read
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading