Many people who want to partner in India's growing capital market look for ways to make money as intermediaries who help investors with their trading and demat accounts. Anyone who wants to work in this field needs to know the difference between an "Authorised Person (AP)" and a "Sub-Broker." This is especially important in today’s environment, where professional standards and income models are already shifting.
Although they both tend to operate as business partners of a main stockbroker, the regulations surrounding them differ, as do their respective income models.
If you’re looking to build a sustainable distribution business in the capital markets, understanding the difference between an Authorised Person and a Sub-Broker is important.
Who Is a Sub-Broker?
A sub-broker was a person or entity registered with SEBI (Securities and Exchange Board of India) that facilitated trading and investing for investors by acting as a representative of a registered stockbroker. This category has since been discontinued, and no new sub-broker registrations are permitted. SEBI has replaced the Sub-Broker model with the Authorised Person framework to streamline supervision, compliance, and accountability. That’s why many new aspirants still have doubts regarding Sub-broker vs Authorised Person.
Historically, Sub-brokers had the following characteristics:
- Operated under a registered stockbroker, not directly with the exchange
- Assisted clients with demat account and trading account setup through the main broker
- Provided clients with a basic understanding of the trading process and how to use the trading platform
- Received compensation as a share of brokerage or commission
- Frequently acted as the first point of contact for client service issues and queries
Who Is an Authorised Person?
An Authorised Person is any person or entity that is appointed as an agent by a stockbroker and approved by the relevant stock exchange to service investors and place orders on trading platforms to trade on behalf of mapped investors.
The most recent update from SEBI to its Authorised Persons framework means that most brokers would typically appoint authorised persons versus sub-dealers when entering the market today. Typically, authorised persons will require:
- To be formally approved by their respective stock exchange upon recommendation from their Stockbroker.
- To place orders on behalf of mapped investors via a Stockbroker's Trading Platform.
- To meet certain eligibility and infrastructure-related criteria as specified by their Stockbroker and stock exchange.
- To earn a portion of brokerage fees that are typically based upon levels of activity (i.e. volume of trades, etc.) of their mapped investors.
- To have higher or clearer compliance and reporting responsibilities than their predecessors as sub-brokers.
- To maintain appropriate records, comply with KYC procedures, and comply with SEBI and Stock Exchange Rules & Regulations.
What Caused SEBI to Move From Sub-Brokers to Authorised Persons?
For many years, the sub-broker model played an important role in India's retail broking system, where their main responsibility was to act as local representatives of large brokerage houses and help investors in their financial journey. However, the model has created many problems, like duplication in registration, uneven compliance standards, and operational complexity for regulators.
In order to simplify operations and address the problems, SEBI gradually restructured the intermediary framework over time and discontinued new sub-broker registrations, shifting the ecosystem to the Authorised Person framework to improve supervision and compliance. Under this model, exchanges and brokers can appoint APs where parent brokers take the full responsibility for supervising their partners and ensuring that the regulatory rules are followed. Today, the model represents a more streamlined route to participate in the retail broking system and has better accountability than the previous sub-broker model.
What does that mean for Today's Market Entrants?
For new partner registrations, the Authorised Person (AP) framework is the default structure. This is the standard onboarding structure used by brokers today and the model the industry currently operates under. SEBI also proposes minimum education requirements, mandatory NISM certifications, and higher security deposits for brokers hiring APs. The goal is simple: Ensuring that anyone entering the system is better trained, more accountable, and prepared to work within a regulated framework.
In simple terms, the Industry has moved towards a more structured, professional, and compliance-focused partner model.
Difference Between Sub-Broker and Authorised Person
Investors may view the debate regarding the distinctions between an authorised person and a sub-broker as purely theoretical and have no direct impact on their relationship with their broker. However, the way that firms are regulated and marketed can differ significantly for each classification, especially when dealing with new agents.
The following comparison will provide basic insight and assist you in determining which one of these two paths you should pursue to become an agency representative in the present environment:
Key Differences at a Glance
| Aspect | Traditional sub-broker | Authorised person |
|---|---|---|
| Regulatory registration | Usually registered directly with SEBI under the older framework | Approved by the stock exchange through the parent broker |
| Current status for new joins | No new registration. | Primary route for new partner registrations today |
| Role description | Independent intermediary under a broker, responsible for client onboarding, trading support, & direct compliance. | Broker-approved partner focused on client acquisition and servicing, with compliance handled by the parent broker |
| Income model | Share of brokerage / commission from broker | Revenue-share linked to active client volumes and trading frequency |
| Compliance responsibility | Earlier dual responsibility with SEBI and the broker | Broker holds primary accountability; AP follows exchange and broker norms |
| Branding and representation | Often displayed the sub-broker name with the broker branding | Typically uses the broker's brand with the mapped AP code |
| Infrastructure standards | Less standardised; varied by broker | Clearly defined by exchanges- minimum space, equipment, and staff requirements |
How to Become an Authorised Person in India?
Here is a common step-by-step procedure to follow with most brokers who offer full service.
1. Understand the referral models:
Determine if the broker has an AP review the commissions offered for each, as well as the effort involved, and what kind of investors you will be supporting comfortably.
2. Determine your eligibility
An individual must typically be
- At least 18 years of age,
- Hold a 10+2 level of education
- And have PAN, Aadhaar, and bank proof as well as a modest deposit amount.
3. Go through the list of required documentation and forms
When applying to become an Authorised Person, make a list of all required documentation:
- Identity address proof
- Photo ID
- Educational document
- And business registration documents.
4. Application form
Fill in the application form of the broker: AP/ sub broker registration form, and submit all the necessary KYC documents.
5. Background checks/verification
The exchange and broker check on your information, financial stability, and business purpose.
6. Make a deposit/ registration fee
Most brokers also need a certain security deposit or exchange fee according to their model.
7. Sign the deal
Sign a formal business deal which specifies the share of revenue, duties and adherence.
8. Undergo training
Basic training Brokers tend to undertake product and compliance training to make sure that they are knowledgeable about how to handle investors, use the platform, and work with regulations.
9. Get your AP code
When you have been approved by the exchange, you are issued your Authorised Person code and can commence operations.
10. Start client acquisition
Start acquiring investors, assisting them in opening accounts, and making commissions on trades and referrals.
How Choice Connect Supports Your Growth
Choice Connect is a partner-friendly platform designed to meet the needs of both CBAs (Choice Business Associates) and APs (Authorised Persons).
If you’re interested in becoming a financial advisor, your primary focus will be on
- Finding investors
- Helping them open Demat accounts
- And earn a commission for each investor you onboard.
On the other hand, APs typically have a more active role that aligns with what most people are looking for when searching for how to become a sub-broker.
As an Authorised Person, your primary duty will be assisting investors with their equity trades and earning a commission. If you find yourself struggling to decide between the authorised person and sub-broker nomenclature, Choice may simplify this decision by placing more emphasis on the paths that are best aligned with your income goals and comfort levels.
Key Takeaway: Which Path May Suit You Better?
As an Authorised Person or Sub-Broker, it is up to you what you want to achieve in your career and the extent to which you wish to deal with clients. APs provide a more structured and professional avenue, and are more demanding and provide an opportunity to earn money by trading.
In case you like assisting people in recognising what is occurring in the market, monitoring and recommending customers on trades, and creating a more key association with your customers, being an AP might provide higher long-term incomes. Alternatively, in case you want to work in a field where you are more likely to work with clients and onboard them than to be an active trade-facilitator, a CBA-type course can be a good fit.
For those looking to partner with a platform that combines technology with local support, Choice Connect allows you to get started as a CBA or Authorised Person (AP). With practical tools, regional support, and ongoing training, partners can focus on building and growing their financial business.