How to choose the right sub broker franchise in India?

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The Indian stock market has grown by leaps and bounds in the last three decades. As a result, the stockbroking industry, too, has grown at a fast rate, with many prominent and reputed broking brands emerging across the country.

While stockbroking can be a rewarding business opportunity, not everyone has the financial and other resources to get into this business. So, what to do if you want to get into broking, but feel that you may not have adequate resources for it?

In that case, you can become a sub-broker of a bigger stockbroker. But, how to find the best broker for sub-brokership? After all, there are zillions of brokers out there. How to choose the best sub broker franchise in India?

Additional Read: How does a share market franchise work

Factors to keep in mind while finding a sub broker franchise in India

  • Reputation of a broker: The most important factor is a broker’s reputation. If a broker enjoys a good brand name or reputation in the industry, then people will like to trade with him, and vice versa. Therefore, it is extremely important to find a broker with a good reputation. For this, you should do a lot of research. Read all the relevant news, Google reviews, and take feedback from regular traders and investors to understand what they think about a broker. Only if you are sure that a broker has a good reputation, should you try to become his sub-broker. Let us take the case of Bajaj Broking, which is a subsidiary of a reputed non-banking financial company, Bajaj Finance. Bajaj Finance has built its reputation over decades and being its 100% subsidiary, Bajaj Broking too has a solid brand name in the industry.
  • Business model of a broker: A sub-broker sells the products of a broker to his clientele using the infrastructure of a broker. In return, a sub-broker shares revenue with a broker. Therefore, it is extremely important to understand the business model of a broker. This means the percentage of revenue, which a broker is willing to share with its sub-broker.
  • Variety of products offered by a broker: As a sub-broker, you will be selling the products of a broker. If a broker has a limited range of products, then you will be compelled to offer only a limited range to your clients. However, if a broker has a diverse range of products, your clients will have a lot to choose from. Therefore, you should find a broker that has many products to offer. Whether people want to invest in shares, debentures, bonds, mutual funds, or exchange-traded funds, they should be able to do so using a broker’s platform. For example, Bajaj Broking allows people to invest in shares, mutual funds, bonds, initial public offerings (IPOs), national pension system (NPS), and even US stocks. Such kind of a platform can help people diversify their portfolios by holding investments across several asset classes.
  • Quality of a broker’s trading platform: As a sub-broker, you will buy and sell securities on behalf of your clients. However, since you do not have your own platform, you will be using the platform of a broker, whose business you are running on a franchise basis. Therefore, it is extremely important that a broker’s trading platform is able to seamlessly execute the transactions of your clients. If there are glitches in the platform, then it will affect your ability to execute the transactions, and your clients will not be pleased about it. Therefore, before becoming a sub-broker, always research a broker’s trading platform adequately so that you and your clients do not have to face issues later. There are brokers, which provide a seamless trading experience through their website and app. Bajaj Broking is one such broker. Bajaj Broking also has a desktop trading terminal called ‘NEST’, which is meant for advanced traders because it offers them several tools and real-time market data.
  • Level of support provided by a broker: A broker needs to provide prompt and adequate support to his sub-brokers. If sufficient support is not provided, then it may harm the relationship between a sub-broker and his clients. On the other hand, if a broker provides support to his sub-broker whenever needed, then it may even help market the products and services of that broker, thereby improving his reputation. When a broker provides quality support to his sub-broker, it is a win-win for both that broker and his sub-broker. Besides, it is also beneficial for that sub-broker’s clients.

Additional Read: How to become sub broker

Conclusion

If you have decided to become a sub-broker using the broking franchise model, you should invest as much effort as possible in finding the right stockbroker. Finding the right broker is not just the first step, it is the most important step. This is because you will be essentially marketing the products of your broker using the broker’s trading platform. Then, you should build a loyal clientele. You should always try to understand the requirements of your clients and then offer them a product. It is also important to check whether your vision aligns with that of your broker’s vision. If that is the case, you are well set to have a fruitful business collaboration.

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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