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Entering the stock market for the first time can feel complex, especially when understanding the roles of different intermediaries involved in executing trades. Whether you are buying shares or exploring investment opportunities, a registered stockbroker plays a critical role in facilitating these transactions.
In India, stockbrokers operate under the regulatory framework of the Securities and Exchange Board of India (SEBI), ensuring transparency and investor protection. Alongside brokers, another important participant—known as an Authorised Person (AP)—helps extend these services to a wider investor base.
Understanding the difference between a broker and an authorised person is essential for making informed investment decisions and navigating the financial ecosystem effectively.
Table of Contents
Defining a Broker
A stockbroker is a SEBI-registered individual or company authorised to buy and sell securities on behalf of clients. Brokers act as a crucial link between investors and stock exchanges, ensuring smooth execution of trades.
They also provide trading platforms, market insights, and, in some cases, investment advisory services.
Types of Brokers
Full-Service Brokers
Full-service brokers offer a comprehensive range of services, including investment advisory, research reports, portfolio management, and customer support. They typically charge brokerage fees based on the transaction value.
Flat Brokerage Brokers
These brokers charge a fixed fee per trade, regardless of the transaction size. They combine features of both full-service and discount brokers, offering limited advisory services along with cost efficiency.
Discount Brokers
Discount brokers provide low-cost trading services with minimal or no advisory support. They usually charge a flat fee per transaction and focus on efficient trade execution through digital platforms.
Defining an Authorised Person
An authorised person (previously known as a sub-broker) is an individual or entity appointed by a registered stockbroker to act as an intermediary between the broker and clients.
Authorised persons:
- Help onboard new clients
- Provide basic support and guidance
- Assist in order placement and account handling
They operate under the broker’s registration and regulatory framework and earn a share of the brokerage generated from their clients.
An Authorised Person is not registered with the Securities and Exchange Board of India. They are appointed by a SEBI-registered broker, and their registration is approved by stock exchanges, such as the National Stock Exchange and the Bombay Stock Exchange.
Differences Between Broker and Authorised Person
| Basis | Broker | Authorised Person |
| Registration | Registered with SEBI | Appointed by broker and approved by exchanges like National Stock Exchange and Bombay Stock Exchange |
| Role | Executes trades directly on stock exchanges | Acts as an intermediary between broker and clients |
Trading Rights | Can execute trades independently | Cannot execute trades independently |
| Revenue Model | Earns full brokerage | Earns a share of brokerage as per agreement |
| Client Interaction | May interact directly or digitally | Provides personalised client support |
| Depository Role | Can act as Depository Participant with National Securities Depository Limited or Central Depository Services Limited | Cannot act as DP |
Importance of Brokers and Authorised Persons
Brokers
Brokers play a central role in the financial ecosystem by enabling investors to participate in the stock market. They provide trading infrastructure, ensure regulatory compliance, and may offer research and advisory services to support informed decision-making.
Authorised Persons
Authorised persons extend the reach of brokers by connecting with a wider client base. They offer personalised assistance, help clients understand the trading process, and facilitate smoother communication between investors and brokers.
Their role is particularly important in improving accessibility and investor participation in financial markets.
Conclusion
The primary difference between a broker and an authorised person lies in their roles and regulatory standing. A broker is a SEBI-registered entity authorised to execute trades and provide market access, while an authorised person operates under a broker to expand client reach and provide support services.
Both play complementary roles in enhancing efficiency, accessibility, and trust in the financial ecosystem.
Disclaimer: The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. Readers are advised to consult their financial advisor before making any investment decisions. The content is based on publicly available information and applicable regulations under the Securities and Exchange Board of India (SEBI). For detailed disclaimers and statutory disclosures, please visit.