What is an Authorized Person?
An Authorized Person (AP), formerly known as a sub-broker, is an individual or entity registered with SEBI who acts as an intermediary between customers and a stock broker. APs facilitate client acquisition, account opening, order execution support, and investor education. They operate under the trading member (stock broker) licence and must comply with SEBI and exchange regulations. The AP model allows brokers to expand their reach across India, especially in tier-2 and tier-3 cities.
Roles and Responsibilities
Authorized Persons assist clients with account opening and KYC procedures, provide market information and trading support, handle client grievances at the first level, and ensure compliance with regulatory guidelines. They earn revenue through commission sharing with the main broker based on the trading volume generated by their clients. APs must maintain proper records, follow client on-boarding procedures, and adhere to the code of conduct prescribed by SEBI and stock exchanges.
How to Become an Authorized Person
To become an AP, you need to partner with a SEBI-registered stock broker, clear the NISM Series VIII certification exam, complete the registration process with the relevant stock exchange (NSE/BSE), and set up the required infrastructure including a registered office. The initial investment varies depending on the broker and business model. APs can also offer additional services like financial planning, mutual fund distribution, and insurance, making it a comprehensive financial services business opportunity. The Authorized Person framework is governed by SEBI and the stock exchanges' code of conduct (see SEBI: https://www.sebi.gov.in/).