Authorised Person of Stock Exchange: Role, Eligibility Criteria, and Compliance

The Indian capital market has witnessed significant growth over the years, with increasing participation from retail and institutional investors. To expand their reach and provide better access to trading services, stock brokers appoint intermediaries known as Authorised Persons.

Authorised Persons play an important role in connecting investors with registered stock brokers and facilitating participation in the securities market. Understanding the concept of an Authorised Person, along with its role, eligibility criteria, and compliance requirements, can help individuals and entities explore opportunities within the stock market ecosystem.

Table of Contents

What is an Authorised Person?

An Authorised Person (AP) is an individual or entity appointed by a registered stock broker to act as an agent for providing access to trading on stock exchanges. Authorised Persons assist clients in accessing trading platforms, facilitate account opening processes, and help investors execute transactions in securities.

While they operate under the supervision of a stock broker, Authorised Persons are not direct members of the stock exchange. Instead, they function as an extension of the broker’s network and help expand its reach.

Authorised Persons can operate in the following forms:

Individuals
Partnership firms
Limited Liability Partnerships (LLPs)
Companies or other corporate entities

Role of an Authorised Person

Authorised Persons play a crucial role in supporting brokerage operations and assisting investors.

Client Acquisition

They identify potential investors and introduce them to stock market services offered by the broker.

Facilitating Trading Access

They help clients access trading platforms and assist in executing buy and sell orders.

Client Support and Assistance

They guide clients through account opening, documentation, and usage of trading platforms.

Relationship Management

Maintaining long-term relationships with clients and addressing their queries is an essential part of their role.

Market Awareness

They may help clients understand basic market concepts, trading processes, and available investment options.

Eligibility Criteria to Become an Authorised Person

Stock exchanges prescribe eligibility criteria for both individuals and non-individual entities.

For Individuals

An individual must generally:

Be at least 18 years of age
Be an Indian citizen
Possess basic educational qualifications
Have a good reputation and integrity
Not have been convicted of any offence involving fraud or dishonesty

For Non-Individuals

Entities such as partnership firms, LLPs, and companies must:

Ensure their partners/directors meet eligibility requirements
Have constitutional documents permitting financial/securities activities
Maintain adequate infrastructure and operational capability

Compliance Requirements for Authorised Persons

Authorised Persons must comply with regulations prescribed by stock exchanges and the Securities and Exchange Board of India.

Registration with Stock Exchange

They must be registered through the stock broker before commencing operations.

Agreement with Stock Broker

A formal agreement defines roles, responsibilities, and operational terms.

Regulatory Compliance

They must adhere to SEBI guidelines, stock exchange rules, and broker policies.

Restriction on Handling Client Funds

Authorised Persons cannot receive or hold client funds or securities. All transactions must be routed through the broker.

Infrastructure Requirements

They must maintain proper office setup, systems, and client servicing capabilities.

Benefits of Becoming an Authorised Person

Becoming an Authorised Person provides an opportunity to participate in the financial services sector.

Key benefits include:

Opportunity to build a business in capital markets
Access to brokerage infrastructure
Ability to build and manage a client base
Participation in a growing financial ecosystem

How to Become an Authorised Person

Individuals and entities interested in becoming an Authorised Person can approach a registered stock broker and complete the required onboarding process, documentation, and registration formalities.

Applicants are required to meet eligibility criteria and comply with regulatory requirements prescribed by stock exchanges and SEBI.

Explore Authorised Person Opportunities

Eligible individuals and entities may explore opportunities to become an Authorised Person through registered stock brokers.

Share India Securities Limited offers the facility to apply for Authorised Person registration, subject to applicable eligibility criteria and regulatory requirements.

Onboarding Options

For Individuals: Available through both online and offline onboarding processes
For Non-Individuals (Companies, LLPs, Partnership Firms): Available through the offline onboarding process

For more details on eligibility, documentation, and the application process, applicants may refer to the official website Share India.

Conclusion

Authorised Persons play an important role in expanding market access by supporting stock brokers and assisting investors in participating in trading activities. By facilitating client onboarding and providing operational support, they contribute to the growth of the capital markets.

Individuals and entities interested in entering the securities ecosystem can consider becoming an Authorised Person, subject to eligibility and regulatory compliance.

Disclaimer: The information provided in this article is for general informational purposes only and should not be considered financial or investment advice. Readers are advised to refer to applicable regulations or consult professionals for specific guidance.