The terms sub-broker and Authorised Person (AP) are often used interchangeably in India's stock market industry. However, there is an important regulatory distinction between the two, particularly because the sub-broker framework was discontinued and the Authorised Person framework was introduced.
For anyone planning to start a stock market partnership business in 2026, understanding the difference between a sub-broker and an Authorised Person can help clarify the registration process, responsibilities, sub broker commission, and sub broker business model.
What Is a Sub-Broker?
Historically, a sub-broker was a person or entity that was not a member of a stock exchange but acted on behalf of a stockbroker to assist investors with buying, selling, or dealing in securities.
Under the earlier SEBI framework, sub-brokers were required to obtain registration and follow specific regulatory requirements. The framework also prescribed responsibilities relating to client dealings, records, conduct, and compliance.
However, SEBI subsequently discontinued the separate sub-broker registration framework and introduced the Authorised Person model.
What Is an Authorised Person?
An Authorised Person is an individual, partnership firm, LLP, or body corporate appointed by a stockbroker to provide access to the trading platform of a stock exchange as the stockbroker's agent.
An AP works in association with a registered stockbroker and operates within the scope of the broker's authorisation and applicable exchange requirements.
In simple terms, the AP model replaced the older sub-broker structure while continuing a similar business function.
Sub-Broker vs Authorised Person: Key Difference
Factor Sub-Broker Authorised Person Regulatory framework Earlier framework Current framework Separate sub-broker registration Required under the old framework APs are appointed through the stockbroker and exchange process Relationship with broker Worked as an intermediary/agent of broker Acts as an agent of the stockbroker Role Assisted investors with securities transactions Provides permitted services and access to the broker's trading ecosystem Current relevance Legacy terminology/framework Current terminology Business model Revenue/business arrangement with broker Revenue/business arrangement with broker Commission Historical sub-broker commission structure Commission/revenue sharing as agreed with the brokerSEBI's material comparing the two models noted that the role and functioning of sub-brokers and Authorised Persons were substantially similar, while the registration and regulatory structure differed.
Is a Sub-Broker the Same as an Authorised Person in 2026?
From a practical business perspective, the terms are often used to describe a similar type of stockbroker partnership. However, Authorised Person is the current regulatory terminology, while "sub-broker" generally refers to the older framework.
Therefore, someone searching for a sub-broker business opportunity in India in 2026 will typically need to explore an Authorised Person partnership with a registered stockbroker rather than seek a new sub-broker registration under the old framework.
The sub broker business model today is therefore generally understood in the context of an Authorised Person partnership, where the partner works with a registered stockbroker and earns according to the agreed commercial arrangement.
How Does an Authorised Person Work?
An AP works with a stockbroker to support investors and expand the broker's reach. Depending on the broker's business model and applicable requirements, an AP may assist with activities such as:
- Client acquisition
- Account-opening support
- KYC-related processes
- Trading platform assistance
- Customer support
- Investor education and communication
- Other broker-approved services
The exact activities permitted can vary according to the stockbroker's policies and applicable regulations.
An AP does not become a stock exchange member simply by being appointed by a broker. The stockbroker remains the registered intermediary responsible for the relevant brokerage activities.
How Is an Authorised Person Registered?
An individual or eligible entity seeking to become an AP generally approaches a registered stockbroker. The broker evaluates the applicant according to its requirements and submits the necessary application to the relevant stock exchange for approval, as applicable.
Applicants should check the latest eligibility requirements, documentation, agreements, fees, and compliance obligations with the stockbroker and relevant exchange before starting the process.
What Are the Responsibilities of an Authorised Person?
An AP must operate within the scope of its appointment and follow applicable regulatory and exchange requirements. Key responsibilities can include maintaining transparent client communication, protecting confidential information, following the broker's compliance procedures, and providing services fairly and responsibly.
An AP should also avoid activities that require a separate regulatory registration unless it has the necessary authorisation.
How Does Sub-Broker Commission Work?
Sub broker commission generally refers to the income or revenue share a partner may receive under the commercial arrangement with a stockbroker. The exact structure can vary between brokers and may depend on factors such as eligible business generated, client activity, products, and agreed revenue-sharing terms.
Prospective partners should carefully review how the sub broker commission is calculated, when payouts are made, and whether there are any applicable costs, conditions, or performance requirements.
Can You Still Start a Sub-Broker Business in 2026?
If you want to start this type of business in 2026, the relevant route is generally to explore an Authorised Person partnership rather than applying for a new sub-broker registration under the discontinued framework.
The sub broker business model can still involve many functions traditionally associated with a sub-broker, such as client acquisition, relationship management, and assisting investors with the broker's services. However, the regulatory structure and terminology have changed.
Which Is Better: Sub-Broker or Authorised Person?
For a new entrant in 2026, Authorised Person is the relevant model. The comparison is therefore less about choosing between two separate business models and more about understanding the transition from the old sub-broker framework to the current AP framework.
Before joining a stockbroker, prospective partners should compare:
- Sub broker commission and revenue-sharing arrangements
- Technology and trading platforms
- Customer support
- Training and compliance assistance
- Marketing support
- Client onboarding processes
- Contractual terms
- Operating costs
- Business development support
A strong sub broker business model should be evaluated based on its complete commercial structure rather than focusing only on the commission percentage.
Conclusion
The main difference between a sub-broker and an Authorised Person is their regulatory framework and terminology. The sub-broker model belongs to the earlier regulatory structure, while the Authorised Person framework is the current model for individuals and entities partnering with stockbrokers.
For anyone looking to start a sub-broker business in India in 2026, understanding the Authorised Person model is essential. The potential sub broker commission, revenue-sharing structure, technology, support, compliance requirements, and overall sub broker business model should be carefully evaluated before entering into an agreement with a stockbroker.
Prospective partners should also review the latest SEBI and stock exchange requirements and verify the current terms directly with the stockbroker before starting the business.
