- Stock broking business is covered under the SEBI Act, 1992. A stock broker is a member of a stock exchange who buys and sells securities for clients through a stock exchange in return for commission. A sub broker acts as an agent to the broker and assists the investors in buying, selling and dealing in securities through such stock brokers.
For the carrying out the business of a broker, one has to register himself under SEBI (stock broker and sub-brokers) regulations, 1992. Section 9 and 14 of the said regulation clearly state that, if the certificate of registration is not granted by the board, both broker and sub- broker cannot buy, sell or deal in securities.
No stock broker or sub- broker is allowed to practice unless such person has a valid “Certificate of Registration” from SEBI.
There is a scope where one can become an “Authorized person” of a registered broker.An authorized person acts as an agent of a stock broker who provides access to trading platform of stock exchange.
The following persons who meet the requisite eligibility criteria as prescribed by SEBI / Stock Exchange shall be appointed as an Authorized Person:•An individual who is a resident of India•A Partnership Firm registered under Indian Partnership Act, 1932•A Limited Liability Partnership (LLP) registered under the Indian Limited Liability Partnership Act, 2008•A Body Corporate registered under the Indian Companies Act, 2013
The duties and liabilities of authorized person are same as a sub broker. An authorized person just needs an approval from SEBI and there no need for mandatory registration under SEBI Regulations, 1992. But in case of representation to the investors, name of the registered stock broker along with his registration ID should be clearly displayed. In short, the authorized person doesn’t need to register but he ought to act only under the name of his registered principal broker as per his directions.