Overview of Stock Broker License

A Stock Broker is a financial expert who buys & sells stocks as per the requirements provided by the clients. Basically, it’s a middleman carrying expertise & the authority to buy/sell stocks on the stock exchange. It is also known as broker, their main role is obtaining purchase & sale orders and execution of the same. Market investors/participants rely on their knowledge regarding market dynamics to invest in stocks & other investment options. There is a platform where a Stock Broker does trading known as Recognized Stock Exchange. However, a Stock Broker must get membership in any recognized stock exchange, he/she can start trading after that. A list of recognized stock exchanges in India are:

• BSE Ltd.
• National Stock Exchange of India Ltd.
• Calcutta Stock Exchange Ltd.
• Indian Commodity Exchange Ltd.
• Multi Commodity Exchange of India Ltd.
• Metropolitan Stock Exchange of India Ltd.
• National Commodity and Derivatives Exchange Ltd.

What are the 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.

What are the Qualifications Required to Become a Stock Broker in India?

The following are the required qualifications to become a Stock Broker:

• Education: If a Stock Broker wants to work with an institutional client, they must have a Bachelor Degree in Finance/Business Administration. It is also better to know financial forecasting, accounting processes & planning as well as relevant rules & regulations.
• Examination: In India, a Stock Broker must pass the FINRA (Financial Industry Regulatory Authority’s General Securities Representative Exam). An individual must be funded by a FINRA member firm/SRO (Self-Regulatory Organization).
• Experience: A Broker can start working for a brokerage business in any function, even as a college intern & obtain on-the-job experience. To become a Stock Broker, he/she must be aware of accounting standards & financial market rules.

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.

Pre-Considerations to Register as a Stock Broker under SEBI

To register as a Stock Broker in India, the applicant is required to submit an application. On receiving such application the board shall take the following into consideration:

• The applicant must be eligible to become a member of any stock exchange;
• If the applicant is considered fit & proper as per the Schedule II of the SEBI (Intermediaries) Regulations, 2008;
• The applicant must have required infrastructure having adequate office, manpower & equipment;
• Net worth & deposit requirements mentioned under Schedule VI are fulfilled by the applicant;
• The applicant must not be new to this sector, it must have some relevant experience in trading of securities;
• The applicant or any of its partner, employees/directors are or were subject to any disciplinary proceedings under the relevant laws;
• If the Certification under SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007 or as may be required regulation is taken/not;
• The applicant must fulfill all the eligibility requirements mentioned under Rule 8 of Securities Contracts (Regulations) Rules, 1957. This rule states the constitution types eligible to apply, minimum director requirement, work experience conditions, etc.

Checklist for Strock Broker License

The following are the required checklist for Strock Broker License:

• PAN Card of the applicant;
• Name of the applicant, trade name, address of the applicant, name of stock exchange, and contact details;
• Type of Organization – Partnership, Sole Proprietorship, or any other Company (Like Private Limited Company, Public Limited Company, etc.);
• Net-Worth Certificate;
• Moa and AoA or Deed;
• Audited or un-audited Financial Statement of Applicant;
• KYC documents such as PAN & Aadhar of Proprietor/Director/Partner;
• Certificate of Incorporation;
• Details of Sales Personnel or approved user who has passed any certification program;
• MOU or Contract Agreement copy with clearing member if the applicant want to clear & settle trades via clearing member;
• Recommendation of Stock Exchange;
• Educational Qualifications & Experience in derivatives trading/securities market of Director/Partner/Proprietor.

Online Process to get Stock Broker License in India

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

Step 1: First, an application in Form-A provided in Schedule I is required to be submitted to the Stock Exchange where it wants to be admitted as a member.

Step 2: Within thirty (30) days of receiving the application the stock exchange is required to forward the same to the SEBI.

Step 3: After the verification of the application if the Board is satisfied that all the conditions mentioned under Regulation 5 are fulfilled, then the Registration Certificate will be issued, and the stock exchange is intimated of the same effect.

Step 4: In case the Board is not satisfied with the content of the application when such refusal is to be communicated to the respective applicant and to the Stock Exchange as well within 30 days from the refusal date. However, the applicant must be provided with an opportunity of being heard.

Step 5: If any applicant with a rejected application has an another option to reapply within 30 days from the rejection date, which will be considered by the Board & decision will be communicated.

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.