An Overview of Stock Broker License in India

In India, stock trading & investing have become profitable career options. Especially after the covid India has seen a huge increase in the number of traders & investors that have taken a dip in the stock markets. While there are multiple traders & investors in India, the number of stockbroker & sub brokers are relatively low and this creates a good career & business opportunity to become a stockbroker and a sub broker in India. Being a Stock Broker is a profitable yet complex business that requires a lot of skills & utmost knowledge of the markets. The process to become a stockbroker is also a quite complex where the applicant has to first meet all eligibility requirements for Stock Broker License & ensure that they have complied with all the basic requirements to become a stockbroker. At Whizseed, we offer Stock Broker License Service and ensure adherence to SEBI Regulations. Our experts are highly qualified in the Stock Broker Licensing sector and help from the starting stage of filing the application to ongoing monitoring.

Who is a Stock Broker?

A Stock Broker is a financial market representative or expert who operates in securities & their main job role dictates obtaining purchase & sale orders and execution of the same. Market investors or participants rely on their expertise & knowledge regarding market dynamics to invest in stocks & other investment options.

Stock Broker can be an individual or an entity that has the authority to sell & purchase securities on the recognized stock exchanges on behalf of the investors & traders. For this, the individual or an entity has to first become a member of a recognized stock exchange after following the process & paying the requisite fees. An individual can also become a sub broker by working in a brokerage firm & acting on behalf of the trading member as their agent or otherwise.

Roles of a Stock Broker in India

The following are the roles of a Stock Broker in India:

• Effortlessly managing the investment portfolio of an investor;
• Providing detailed investment advisory services;
• Thoroughly interpreting & analyzing the financial reports;
• Buying & selling securities on customer’s behalf;
• Give suggestions to the investors about the potential investment scope & opportunities.

Different Types of Stock Brokers in India

• Traditional/Full-Time Broker: This type of Brokers provides an extensive assortment of products & services to its clients. These services involve securities trading, investment advice, retirement planning, management of investment portfolio, taxes on capital gains, etc. These Stock Brokers charge heavy commission, however, given the range of their services, such cost might justify.
• Arbitrageurs: These types of Stock Brokers are known to purchase securities from 1 stock exchange at a lower price & then sell the same at a higher price in a different stock exchange.
• Discount Brokers: These Brokers dominate the band of brokers and along with their inexpensive nature, they also offer convenience to the laymen in terms of time & place utility. Market participants don’t need to meet Discount Brokers personally & carry out their investments via the internet. Also, those investors who have minimal disposable income can also start investing in the stock market with the help of Discount Brokers. However, not all discount broker offer same level of knowledge & expertise as a Traditional Broker and thus are less profitable option for individuals & companies who can afford heavy investment costs.
• Jobbers: Jobbers are independent brokers who trade in securities for their own sake & not on behalf of other investors. Also, they are not licensed to trade in someone else’s name & cannot charge commissions from others.

Benefits of Using a Stock Broker in India

The following are the benefits of a Stock Broker in India:

• Access to Market: Stock Brokers give you full access to the stock market & other investment options like bonds, Mutual funds, etc.
• Detailed Research & Analysis: They provide research reports & market analysis, saving your effort & time in understanding market trends.
• Risk Management: Stock Broker can help you diversify your portfolio to lessen risk & increase chances of returns.
• Expert Advice: They provide professional advice to assist you in making informed investment decisions.
• Safety & Regulation: Such Brokers are regulated by Financial Authorities, which ensure safe transactions & protection against any fraud.

Eligibility Criteria for Stock Broker License

To become a Stock Broker in India, you have to meet all the eligibility criteria set by SEBI. The following are the eligibility criteria to become a Stock Broker in India:

1. The applicant can be an individual or any other organization (registered LLPs, Partnership Firms, Companies or institutions);

2. An individual has to be an Indian Citizen of a minimum of 21 years of age and there is no limit on the maximum eligible age for being a stock broker;

3. The minimum qualification to be a stock broker is having an HSC or its equivalent;

4. Basic Certification in either Securities Market (Basic) Module/Compliance Officers (Brokers) or relevant modules as per the required segment for membership of exchange;

5. The applicant must have the following skills:

• Analytical skills;
• Communication & presentation skills;
• Financial knowledge & good knowledge of computers;
• Knowledge of the stock markets & their movements;
• Minimum experience of 2 years working as a partner, authorized assistant or authorized clerk or apprentice to the member;
• BMC or Basic Minimum Capital Deposit required to be a stockbroker

Documents Required for Stock Broker License in India

Along with the eligibility criteria, the applicants also have to submit the prescribed set of documents along with the application form and the required documents include:

• A duly filled application form;
• Basic details such as name & address of the applicant along with the contact details, trading firm name, name of the stock exchange;
• Documents asserting the organization type like Partnership Deed, MoA & AoA (in case of a non-individual);
• PAN of the applicant;
• Educational qualifications of the applicant;
• Certificate of Incorporation;
• Certificate of passing the required module;
• Memorandum of Understanding (MoU) or copy of the Contract Agreement entered with the clearing member in case where the applicant wants to clear & settle trades via such clearing member;
• Recommendation from stock exchange.

Process to Get Stock Broker License in India

The following is the step-by-step process to get Stock Broker License Online:

• First, you need to download the application form from the website of SEBI/by visiting its nearest office;
• Then you need to submit the application form “Form-A” for Registration as Stock Brokers with SEBI along with all the required documents;
• If all the details/information provided is in order, the applicant will get an acknowledgement of their submitted application;
• The application form & the documents will be verified for Board Approval & SEBI Certification following which the applicant will be issued an offer letter of temporary membership;
• The next step is to get the SEBI certification after further processing;
• Moreover, the applicant will have to submit the enablement documents to the membership department;
• Then the membership department will then provide access to the members on their trading system.

Who cannot be a Stock Broker in India?

As per the Rules & Regulations of SEBI expressly mention the individuals or conditions where individuals or entities cannot become a stock broker with any recognized stock exchanges. The following are the details of the same:

• An entity or a person that has been adjudged bankrupt or insolvent;
• An entity or an individual that has been involved in any offense related to fraud or dishonesty;
• An entity or an individual who has compounded with their creditors for less than the full discharge of debts;
• An individual or an entity involved as a principal or employee of any business other than securities except a broker or an agent not involving any personal financial liability or for providing merchant banking, underwriting, or corporate or investment advisory services unless such ties are severed before admission as a member;
• An entity or an individual declared a defaulter or expelled by a recognized stock exchange or debarred from trading in Securities by SEBI or RBI or similar authorities or has been qualified as per the provisions of Securities Contract (Regulations) Act, 1956 or Rules made thereunder;
• If the membership application is rejected/disqualified by the registered stock exchange on grounds of it endangering public interest.

Requirements for Post-Registration

The following are the requirements for post-registration of Stock Broker:

• In case of any change in management or control, the stock broker must communicate the same to the Board;
• The Stock Broker has acquired Stock Exchange trader membership;
• Code of Conduct as prescribed under Schedule II of the Regulations must be abided by the Stock Broker;
• Net-Worth requirements must always be maintained as per Schedule VI of the Regulations;
• All the applicable rules & regulations & bye-laws of the respective stock exchange must be followed;
• All the investor grievances must be addressed to within one month from the date of their receipt;
• All the applicable fees must be paid.

How Can We Help You?

Step 1: Connect with Us: Connect with the team whizseed to discuss specific requirements for your business over call or mail. It will take 25-30 minutes to discuss requirements.

Step 2: Dedicated Manager: Once you discussed all the requirements, we will assign a dedicated Account Manager to know your business requirements and he/she will provide solutions & assist entire process.

Step 3: Real-Time Update: Our expert will give you timely updates on a regular basis and you may also know what is going on with your project, and what is done.

Step 4: Final Step: Once all things are completed, you will receive the Certificate directly to your email id.