When talking about the share market and investments, you have come around terms like the Difference between a Broker and a Sub Broker—remembering that you cannot directly invest in the securities. It would help if you had a median to do so. The intermediates are the one who has the authority to purchase and sell the stocks securities on behalf of the client in the share market via stock exchanges.
They registered with the Securities Exchange Board of India (SEBI). SEBI registers the mediators. For the services they provide, they charge some commission or fees, which are the brokerage charges. These are governed and looked under by the various regulations, including the SEBI Act, 1992, Securities Contract Regulations, 1956, etc.
What Is a Stockbroker?
A best stock broker can be related to the registered stock broking firm or an individual in the share market. They are responsible for buying and selling the stock on behalf of the client and charging some brokerage charges. They act as the essential link between the investors and the stock exchange by facilitating the transactions.
On the theory of this, there are different types of stock brokers in the market who are into the transaction between the links.
● Full-Service Stockbrokers: they are the one who provides comprehensive or complete services to the client. The services provided by them include advisory assistance. They help the investor gain insight into the market and the opportunities they may get in the share market and their investments.
Usually, their fees are based on the entire amount involved in the trade execution and the services provided. These are the ones who are well settled in the market and are experienced players. They have a range of networks offices/ branches across the country.
● Discount Brokers: These are some of the most famous in the business who charge comparatively lower fees for the trade execution and charge way less than full-time service brokers. They charge a flat fee for the trade or the lowest percent for the transaction that is going to take place. The service provided by the discount brokers includes the trade execution and doesn’t include the advisory and the research, which are usually offered by the full-time service broilers. These are affordable, and just services are more diminutive.
● Brokers Charging Flat Brokerage: These are stockbrokers who have gained well-known popularity in the digital world. While everyone is accessing the market digitally, they have the upper hand for the same. They mix the traditional full-time service broker and the discount stock brokers who charge a flat rate brokerage fee.
What is a Sub-Broker?
Talking about the central branch, the sub-broker, the sub-broker is the broker’s agent who usually works with the client on their behalf. They are links between the broking firm and the client. The stockbroker usually gives the sub-broker different duties such as providing services and client management.
They receive a commission or the fees or the charges for the services they provide by the stockbroker. The stockbroker can look for the vast network of operations in the country and use the link. The stockbroker connects with the different Sub-brokers and explores and points to the clients from other parts of the county. This is the complete information about the sub-broker working.
Here are the key difference between a broker and a sub broker in the market.
● Broker Vs. Sub-Broker Function: Now, talking about the significant difference between a stockbroker function in individuality or independently, the sub-broker is the mediator link between the client and the stockbroking firm. A sub-broker kept to make a wide connection and help expand the business further in different states, so in short, they make an expanded client base for the stock breaking firms.
Stockbrokers usually act as the depository participant (DPS) of the National Stock Exchange’s (NSEs)-promoted National Securities Depositories Ltd (NSDL) or the Bombay Stock Exchange’s (BSEs)-enabled Central Depositories Securities Ltd (CDSL). Also, the vital thing to note is that both the depositories maintain the stocks and securities in an electronic format. Also, another thing to be noted is that a sub-broker cannot be a DP.
● Broker Vs. Sub-Broker Registration: A stockbroker is the one who is registered with SEBI. Initially, the sub-broker had to be registered with the SEBI, the market regulator, but after 2018, the rule was discontinued for the sub-broker as a category for registration.
The circular issued in August 2018 stated that the sub-brokers had to migrate to the category of ‘Authorised Person.’ the authorized person can be an individual or the firm or the other entities the stockbroker appoints. The sub-broker can also access trading established by the stockbroker.
● Broker Vs. Sub-Broker Revenue Sharing: Sub-brokers have a lot of golf responsibilities, which helps them earn a higher share of revenue generated via the clients. The stockbroker gets a small percentage of income but has overall access to the large ravine, which is caused by the scores and connections of the sub-brokers.
● Broker Vs. Sub-Broker Brokerage: stockbroker charges the direct brokerage from the cl9inest via the transaction they make. Stockbrokers charge direct brokerage fees from clients. On the other hand, sub-brokers are not allowed to set direct payments from the clients. On the other hand, the Sub-brokers get the specific portion of the revenue, which is decided by both the parties and the revenue from the stockbrokers.
● Broker Vs. Sub-Broker Importance: stockbroker plays an essential role in the stock market by providing sufficient liquidity to the clients. They have a crucial role in the capital market chain.
On the other hand, the sub-brokers are the crucial players for the stockbroker who helps expand their business as they are settled in different parts of the country. They help in developing the business. So the stockbroker makes the opportunities for the new people to enter the financial market as agents by providing access to the stockbroking firm’s cutting-edge trading tools and other services. Sub-brokers are the ones who give the deposit fees to the stockbroker.
Conclusion – Difference Between a Broker and a Sub Broker
They conclude the article on the note that it is essential to have complete knowledge of the sub-broker and brokers when you invest in the stock market. They both have different roles and working techniques. They have some standard features attached but vary in a lot more sense. While beginning with the investment, always look for a reliable financial partner. Always see the features they provide, such as the all-in-one trading platform to invest in different stock market options, brokerage cashback, and zero Demat AMC for up to a year.