Sub broker "acts on behalf of a stockbroker as an agent or otherwise for assisting investrors in buying, selling or dealing in securities through such borkers". It is a person who is not a member of a stock exchange. It is required to obtain a Certificate of Registration from SEBI. To get the certificate he must pay fee, undertake appropriate actions to consider investors complaints within one month and keep informed SEBI about number, nature and other specifications of the complaints and be authorised in writing by the broker for mediation in buying, selling and dealing with securities.
Sub broker can work for more than one broker, but he has to be register separately with the SEBI for each broker. According to Khan "consequent to a broker having corporatised his membership, all subbrokers affiliated to him would need to apply to the SEBI for transfer for them affiliation". If any of a sub broker relative have a significant shares in the same company where sub broker has direct on indirect business, he needs to reveal the names of all sub brokers and brokers. Sub broker are committed to sign a contracts and to keep database of their clients in accordance with SEBI system. The agreement between sub broker and broker may be cancelled solely by written termination in advance at least six month by either site.
Securities and Exchange Board of India(SEBI) was set up by Government of India. The main reason for creating the document was the regulation of responsibilities and actions of almost all the players in the capital market. These are instructions for the issuers to provide investor protection. "The SEBI was expected to regulate mutual funds, merchant bankers, registrars to issue, share transfer agents, portfolio managers, underwriters, investment advisors, brokers and sub brokers".
Registration of a sub broker
It is necessary to a sub broker to be registered in SEBI. To get certificate of registration sub broker needs an application with following documents:
- a recommendation from the stockbroker
- two references(one from his banker)
Interested stock exchange has confirmed these information. Verified are also data such as a name, an age (applicant must be not less than 21 years of age), a criminality, an education (the equivalent of 12th standard examination is passed), an infrastructure (office space, equipment, menpower). SEBI should get all the documents prescribed by the stock exchange within 30 days from the date of the receipt of the application.
Payment of the fee- an annual payment by the sub broker is Rs 10,000 for the first five years. After these years is less - Rs 5,000. Agreement- between sub broker and broker is an agreement based on authority, responsibilities and rules. Books of accounts- sub broker should provide the same book of accounts an documents as broker. Code of conduct- sub broker has to adhere to code of conduct.
- Khan (2010), p.17.9
- M Y Khan (2013), p.8.8
- Khan (2010), P.17.9
- Gurusamy (2009), p.124
- M Y Khan (2013), p.8.9
- M Y Khan (2013), p.8.9
- Gurusamy (2009), Capital Markets, 2E, Tata McGraw-Hill Education
- Kapila S. (2006) Money Banking and Finance, Academic Foundation
- Khan (2010) Financial Services 5E, Tata McGraw-Hill Education
- M Y Khan (2013) Indian Financial System, Tata McGraw-Hill Education
Author: Weronika Lisik