Do you have what it takes to battle the rise and fall of the stock market? Are you familiar with the variations of the bull and the bear market? Well, if you are confident of meeting the demands of a vital financial facilitator of our economy, then you should consider becoming a stock broker. A stock broker is not merely a person who juggles stocks in the market but, is a thorough analyst of the current economic trends. A person with a keen understanding of the economy and good ability to crunch numbers can consider becoming a registered stock broker or share broker or trader.

Some of you must be trying to find out, who is a stock broker as per stock exchange norms,  or who is a Sub-Broker?  Important terms used in the Stock Exchange:

Let’s take a look at the definition of a stock broker and how he functions in the stock exchange.

Stock Broker: A person or entity who is a registered member of the stock exchange. This person or entity is the ultimate facilitator who carries out stock market transactions on behalf of the investor.

Sub-Broker: Most of the stock traders act as sub-brokers of a stock exchange member. They trade on behalf of the stock exchange member provided they obtain a registration from SEBI.

SEBI: This is the Securities and Exchange Board of India who govern all stock brokers under the SEBI Act of 1992 and the Securities Contract (Regulation) Act of 1956. All stock brokers need to be registered under SEBI and will be governed under the rules, laws and regulations of this authority.

Stock Exchange: A stock exchange is a financial platform for trading in stocks, bonds and other instruments. Dividends and incomes are vetted out from this platform. Shares of companies, trusts and other organisations are traded in the form of securities, bonds and derivatives through a  Kotak Securities (Registered Broker) . There are several stock exchanges in the country and each has its own index that gives an indication of the popularly traded or important listed stocks.

BSE: Bombay Stock Exchange is one of the oldest stock exchanges in the country and in Asia, as old as 1875. Amongst 22 other regional stock exchanges, BSE has the maximum listed stocks in the country. The most popular index traded in this stock exchange is the SENSEX.

NSE: National Stock Exchange is promoted by the government and are led by the largest financial institutions in the country. The NIFTY is the popular index that is used for indicating this stock exchange.

Both BSE and NSE are regulated by SEBI.

A Complete Guide to Becoming a Registered Stock Broker in India

Here’s a complete guide to practicing as a registered stock broker in any stock exchange.

·         Practising as a stock broker or sub-broker or dealer: One of the important things to assess is your own capacity to own your own stock brokerage firm or practise as a sub-broker or dealer.

o   Stock Broker: If you have the financial capacity to start your own stock brokerage firm, then you can proceed with registering as a member of the Stock Exchange with a registration ID. The fees for registering as a member usually go into several lakhs. Stock brokers can share this membership ID with their clients and begin trading.

o   Sub-Broker: Individuals who want to practise on behalf of a registered stock-broker can trade under the membership of a registered member of the stock exchange or a stock broker’s membership ID.

o   Dealer: Sub-brokers can hire dealers to actually input their trades on the stock exchange portals. A dealer is the person who enters the trades on the computer on behalf of the broker or sub-broker.

·         Application process for stock broker or sub-broker or dealer: A stock broker and a sub-broker need to follow the guidelines laid down by SEBI for the registration process. The application process is the same where information such as Name, Address, PAN Number and other important details need to be mentioned, while applying. You will need to also mention the stock exchange in which you would like to trade in. Mention the different segments that you are trading in such as equity derivatives, equities, currency derivatives and also for each category such as trading members, trading cum self-clearing members and professional clearing members.

·         Getting registered: Stock brokers and sub-brokers need to get a Certificate of Registration (CoR) from SEBI in order to proceed with trading. Under the guidelines of the stock exchange, no stock broker or sub-broker is allowed to practice until he/she has a vaildCoR from SEBI. A sub-broker can register as a sub-broker with SEBI,similar to a stock broker.

·         License and registration fees: Stock brokers need to pay membership fees to the stock exchange. Sub-brokers also need to pay a similar amount. These fees are only applicable once the SEBI deems the applicants are eligible to become SEBI registered stock brokers and sub-brokers.

·         Starting the practise: After receiving a membership number, one can begin trading in stocks on behalf of clients. All stock brokers and sub-brokers are listed on the SEBI website of registered brokers.

NSE India has created the National Institute of Securities Markets (NISM) to educate stock brokers, sub-brokers and investors about the stock market. In some cases, having the certification of the NISM is mandatory by some broking firms. Stock broking and sub-broking firms recruit individuals who are proficient in the various concepts of the stock market. In order to become a proficient stock market expert, one needs to have a detailed analysis of the market in addition to, following the guidelines laid down by SEBI.

Author Box

Kotak Securities Ltd is one of the oldest and largest stock broker in India. We offer you investing facilities in various instruments like equities, derivatives, currency derivatives, Mutual Funds and IPO, through our branches and the internet. In addition to this we have a full-fledged Research Team with years of experience in the industry.

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