In stock market terms, brokers and traders often discuss APs. Some refer to it as an agent or a sub-broker to the trading member. But ever wondered over the authorised person meaning, and why they matter to stock brokers?
So, keep reading this blog to explore who is an authorised person, their responsibilities, and who SEBI allows to act as AP.
Who Is An Authorised Person?
An Authorised Person (or AP) is an agent acting for the stockbroker or trading member. They provide investors with access to the stock exchange. Think of them as a representative who interacts with people and helps them invest in the market.
To simplify authorised person meaning, these APs tie up with big stock brokers, help investors like you open a Trading/Demat Account, and guide you on how to carry out transactions.
The primary role of an authorised person is to establish a personal connection with the client. If you're stuck with any trade, the sub-broker can help resolve the issue quickly.
Also, a key reason why stock brokers hire such agents is to provide better client support.
For example, suppose you live in a small city and want to trade stocks. Instead of going directly to NSE/BSE, you go to an Authorised Person in your town who is tied up with a big broker. They set up your account and act as your point of contact.
Role of Authorised Person: Their Responsibilities & Duties
For most stockbrokers, Authorised Persons (APs) are an extended arm of their business. The APs main role is to connect investors with the broker's trading platform and ensure smooth participation in the stock market.
Other prominent role of authorised person include;
Client Acquisition
Akin to a franchisee role, these APs reach out to new investors and traders in their area. With the list of prospects displayed, they interact with them and onboard clients for the stockbroker they represent.
Account Opening Support
Now that they have made a bunch of people interested in the product, their next job is to assist clients with KYC, trading account, and demat account opening. Also, they are deemed to help with documentation and compliance as per SEBI rules.
Trading Access
Along with Demat account opening, Authorised Persons provide clients access to the broker's trading terminal/platform.
To further simplify your initial trades, they also help place buy/sell orders if required.
Investor Support & Guidance
In case you face any glitch in the system or during a trading session, these APs act as a local touchpoint for queries, grievances, or technical help.
Plus, they also supply market updates, product information (equity, derivatives, commodities, etc.), and research-backed insights.
Revenue Generation
Apart from assisting clients with stock market and trading access, they also focus on the broker's "Revenue Generation" model.
Through client onboarding, these APs bring more business for the stockbroker. On this hard work, they earn a commission/revenue share on the brokerage generated by their clients.
Compliance Role
Lastly, everything and anything in the stock market falls under the SEBI rules and regulations. Hence, Authorised Persons ensure all trades (made via clients) are routed through the registered broker.
Also, they cannot act independently and make major investment decisions on their own.
Who Can Be Appointed As An Authorised Person?
As per the SEBI rules, an Authorised person can be any individual, partnership firm, LLP, or corporate body appointed by the stockbroker.
Other eligibility criteria for APs include;
Individuals:
- Must be at least 18 years old.
- Should have passed at least 10th / 12th standard (varies by exchange).
- Must not be convicted of fraud or financial crimes.
Partnership Firms / LLPs / Companies:
- They can also apply to be an AP.
- All partners/directors must meet SEBI's fit and proper criteria.
Other Registered Intermediaries:
- Existing Mutual Fund Distributors, Insurance Agents, Financial Advisors, or Sub-brokers can register as APs to expand their services.
Who Cannot Become an AP?
In the above section, we saw who can become an AP. However, there are certain conditions under which a person/entity cannot become an AP.
For example;
- An HUF cannot be appointed as an Authorised Person.
- A Partner/Director or a registered AP cannot act as an Authorised agent.
- A Person cannot act as a sub-broker and AP at the same time – a choice has to be made.
- An Entity or a Person cannot act as an Authorised Person for more than one trading member. The same applies to the same stock exchange also.
How To Become a APs (or Sub-Broker)?
Earlier, Sub-Brokers were common in India, but the SEBI scrapped the sub-broker registration in 2018. As a result, everyone is now classified under the Authorised Person (AP) category. So if you want to act like a sub-broker, you register as an AP.
Here is a detailed guide on how to become a sub-broker:
- Choose a Stockbroker - Select a SEBI-registered broker that offers AP partnerships. Also, compare revenue sharing models, support, and technology they provide at the same time.
Fill Application Form - Connect with the stockbroker and obtain the AP application form from them.
With the form, provide details like (Name, address, qualification, PAN, Aadhaar, etc.) and attach the requested documents.
Submit Required Document - Most of the stockbrokers request these documents, like:
- PAN Card & Aadhaar Card
- Educational certificate (10th/12th or higher)
- Passport-size photographs
- Address proof (utility bill, rent agreement, etc.)
- Bank account details
- Business entity documents (if applying as a company/LLP/firm).
Even some stock brokers may ask for a specific NISM certification as a requirement.
- Pay the Fees - Usually, the stock exchanges (NSE/BSE) charge a small registration fee (usually ₹5000 + GST) for becoming an AP. Also, brokers may charge an additional security deposit fee (which differs across stock brokers).
Verification by Exchange - With document submission, the stock exchange checks your documents and background.
Once approved, you'll get an AP Registration Code.
Start Operations - After approval, you can officially act as an AP.
With this, you will get access to the broker's trading platform, back-office, and marketing support. You can now onboard clients, earn commissions, and expand your business.
Conclusion
An Authorised Person (AP) is simply the bridge between a stock broker and investors. With the sub-broker model gone, APs now carry that role with more clarity and recognition. If you meet the basics and have the drive to guide people in markets, you can partner with a SEBI-registered stockbroker and start your own AP journey.
At its core, being an AP isn't just about registrations and codes. It's about building trust, helping investors, and growing with the market.
