The concept of Authorised Person was introduced in 2009 by SEBI. The term authorize person refers to a person who has been authorized by a stock broker to provide access to trading platform of a stock exchange in form an agent of such broker.
Thus, it is a stock broker who appoints an authorized person. An AP can be associated with only one broker at a time and cannot have multiple affiliations.
Registration procedure for SEBI Authorised Person
While appointing the AP, the stock broker needs to obtain the registration of such AP from the stock exchange with which it is associated.
A unique feature of AP model is that the registration can be done for a specific segment of stock market – like for capital market or currency or Futures & options.
One can either go for one segment or for two or all of such segment.
Eligibility Criteria for Stock Market Authorized Person
An individual or a partnership firm or LLP can be appointed as AP
In case of individual, the person should be at least 18 years old ; if it’s a partnership firm or LLP then all partners should qualify these criteria
The AP should have qualified the matrix i.e. 10th standard
AP should not have any criminal records or a bad repute
Authorised Person should have an understanding of the stock market
The AP should have the required infrastructure like office space, manpower, equipment etc.
How to Become an Authorised Person?
Provide all the documents as required by the stock broker
Stock broker will verify the documents
Upon verification, stock broker will draft an agreement ( this agreement is as per the format prescribed by the stock exchange)
Read this agreement carefully and then sign
After this, the stock broker will take the procedure ahead for registering you with the stock exchange. For this purpose, the stock broker is required to fill an online form and submit the documents provided by you along with the agreement copy to the stock exchange.
In case of BSE, the stock broker will have to submit physical copies of the documents within 7 days of filling the online application but such physical copies are not required in case of NSE. In NSE, one merely needs to upload the scanned copies.
The documents will be then verified by the stock exchange and in case of any deficiency, the application will be returned to stock broker for rectification. Once the documents are verified – the stock exchange will grant its approval/authorization and the process will be completed. Post this, the AP can commence his business operations.
Registration Fee required to Become an AP
While making this application, the AP needs to pay certain registration fee. In case of NSE, the registration fee is fixed at Rs. 2,000 per segment. For BSE also, the fee is in the similar range. The fee is exclusive of any taxes and while making payment the AP will be charged GST additionally.
Documents required to for AP Registration
The documents required to be submitted by the stock broker to the exchange include the following:
A signed undertaking from AP that he is willing to serve as AP and will abide by all the applicable regulations
A signed agreement between AP and stock broker as per the prescribed format
PAN card copy
DOB proof copy
Copy of Address proof
Copy of academic qualification certificate
Benefits of Becoming an Authorised Person
Authorized person Model in Share Market comes with plenty of benefits, here are the list of benefits associated with AP –
Initial Investment is very low
To become an authorized person of a broking house, the initial investment amount starts with as low as Rs.10,000 & goes upto Rs.300,000. This is one franchise business where security deposit is extremely low.
Very decent Commission Sharing
The Commission sharing or Revenue Sharing in this model is is very good. The Authorised person gets about 60%-90% revenue sharing. This massive revenue sharing depends on the volume of revenue generated by the Authorised Person. Higher the revenue better the sharing.
Research & Advisory Support
Another major benefit of Authorised Person model is that they don’t have to set-up their own research & advisory team. This is generally taken care by the broking house. This reduces their investment further.
Products & Service Support
The Authorized Person gets access to all types of products by just paying the minimal charges of Rs.2000 to the exchange. Their clients can trade in Equity, Commodity, Currency, Future & Options. They get full support of all types of trading platforms for free from the broking house be it Trading Mobile App or Desktop Terminal.
Marketing & Advertising Support
The Authorized Person has to rent or own an office space to perform broking activity on behalf of Stock Broker. The Advertising material like banners, flex & any other requirements are provided by the Broking house. The Stock Broker also provides with online marketing support to the Authorized Person.
The Broking company conducts training activity for Authorized person either on monthly basis or every 3 months to keep their partners upto date regarding all the changes of the market. The broking house also organizes big seminars for their Authorized Persons.