How Much A Sub-Broker Earns In India?

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Introduction

With more people entering the stock market each day, the need for sub-brokers has risen in our country. Brokerage firms are reaching out for sub-brokers that can act as intermediaries between them and their clients. This eases out the process for all parties involved and smoothens the flow. In this blog, we will be discussing the range of sub broker earnings and the various factors that determine this amount.

Additional Read: Is sub brokership without deposit possible

What does a sub broker do?

In the business of trading and investment, brokerage firms act as intermediaries between the stock exchange and the investors. They facilitate the transactions for their clients on an online trading platform and charge a commission for the same on a transactional basis. Now, the sub-brokers or authorized persons will bridge the gap between stock broking agencies and their clients. 

The sub brokers would interact with the clients on behalf of the broker, and they would also enter into trades in the stock market on behalf of the broker. The services offered by a sub broker are pretty much similar to that of a broker, except that a sub broker can’t offer these services independently without the official backing of a broker. 

How do sub brokers make money?

Similar to stock brokers, sub brokers also charge a commission for their services. This commission is received from their brokerage firm, as a percentage of the broker’s commission that they receive. This percentage is subject to a number of factors that affect the earning capacity of the sub brokers. Before getting into the numbers, let’s look at the factors that affect sub broker income.

Additional Read: How to become sub broker

Factors affecting sub broker earnings

Sub broker income is dependent on a number of aspects that indicate the value of the sub broker. 

Commission Structure: Sub broker commission does not have a fixed rate across the market. Different brokerage firms offer different rates. A sub broker has to do their research to find out which firm offers them a higher rate of commission.

Trading Volume: The number of clients that a sub broker handles and the volume of trades that they generate, plays an important role in determining the overall sub broker commission. Some traders have a large number of clients and some others focus on highly active traders. Whichever the strategy is, overall a higher trading volume brings a higher commission income for the sub brokers. 

Add-on services: While some sub brokers only offer brokerage services, some others offer additional services to their clients. Some examples of these services are portfolio management, and consulting. The combination can bring in more clients and the additional income from the add-on services would also increase the overall sub broker income. 

Experience and reputation: The experience that the sub broker brings with them, and how much reputation they carry makes a lot of difference in their earning capacity as a sub broker. On the one hand, this can improve the percentage of commission they get from their brokerage firm. On the other hand, a reputed sub broker can bring in more clients and also more high profile clients.

How much money does a sub broker earn?

Sub broker income solely depends on their commission, and this varies from agency to agency. Most brokerage firms offer their sub brokers 50 to 60 percent commission. Bajaj Broking offers its sub brokers up to 65 percent commission. Sub broker commission is calculated per transaction. This is how the calculation works. 

Imagine a company’s shares are trading at 1000 rupees per share. And the brokerage commission is 0.4 percent. Our sub broker’s client has bought 100 shares of this company, and the transaction value would be 1,00,000 rupees. 0.4 percent of this would be brokerage commission and that would amount to 400 rupees. In case the sub broker commission is 60 percent, then the sub broker would get 60 percent of 400 rupees, which would be 240 rupees. 

Other earning opportunities

A share on brokerage commission doesn’t have to be the only income from a brokerage firm for a sub broker. Some firms offer them additional income opportunities as well. For example, Bajaj Broking offers sub brokers a commission as part of a revenue sharing program on their loan products. A sub broker who can get involved with loans can make use of this. The commission rate offered by Bajaj Broking for this program is up to 50 percent. 

Conclusion

As the trading culture becomes increasingly popular in India, it would be a great time for people with market expertise and an earning appetite to make use of this boom. With the right kind of attitude, if one partners up with a reliable brokerage firm, being a sub broker can be a good income opportunity. This is especially true for those who have people skills and a network of people who are enthusiastic about trading and the stock market. 

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. Securities quoted are exemplary and not recommendatory.

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