With the rise of retail participation in the Indian stock market, the demand for investment services has grown significantly. This has opened up rewarding opportunities for anyone looking to become a sub broker in India. But one of the most important aspects to understand before stepping into this role is how the sub broker commission works.
In this article, we break down the brokerage commission structure and how sub brokers earn in today’s market environment.
Who is a Sub Broker in India?
A sub broker in India is an individual or entity that acts as an agent of a stockbroker, helping investors with services like:
- Opening demat and trading accounts
- Executing buy/sell transactions
- Offering investment advice
- Assisting with IPO applications and mutual fund investments
Sub brokers are registered with SEBI and work under the umbrella of a full-service broker or discount broker. They don’t directly execute trades but channel them through the main broker.
Understanding Sub Broker Commission
The sub broker commission is a share of the brokerage revenue generated from the clients handled by the sub broker. It is typically structured as a percentage-based payout.
1. Percentage-Based Sharing Model
This is the most common commission model. The sub broker receives a fixed percentage of the total brokerage commission earned from client trades.
Example:
If a client pays ₹1,000 in brokerage for the month, and the sub broker agreement allows for a 60% share, then the sub broker earns ₹600.
Commission rates typically range from 50% to 75%, depending on:
- The size of the client base
- Trading volume
- Experience and negotiation with the broker
- Services provided (advisory, portfolio management, etc.)
2. Fixed Income or Hybrid Models
Some brokers also offer alternative models:
- Fixed Income: A flat monthly payout, irrespective of client turnover
- Hybrid Model: A mix of fixed income + variable commission (less common)
These models are suited to sub brokers targeting retail clients who may not trade frequently but still need hand holding and advisory.
Factors That Affect Sub Broker Commission
Several variables influence how much a sub broker in India can earn:
- Broker Type: Full-service brokers usually offer higher commission splits than discount brokers
- Client Volume: More active traders = higher brokerage = more earnings
- Value-Added Services: Sub brokers offering advisory or research tend to get better commission deals
- Technology Support: Brokers that provide better platforms and tools may offer slightly lower commission but more efficiency and scalability
Additional Earnings: Referral and Incentive Programs
In addition to the sub broker commission, some brokers offer:
- Referral Bonuses for bringing in new clients
- Incentive Schemes based on targets or monthly performance
- Revenue from Add-on Products like mutual funds, insurance, and loans
These can significantly boost a sub broker’s monthly income.
Final Thoughts
The brokerage commission structure for sub brokers offers a flexible and performance-driven income stream. Whether you’re a finance professional or someone entering the market with a network of potential investors, becoming a sub broker in India can be both financially rewarding and professionally fulfilling.
Choose the right broker partner, understand your earning potential, and build long-term relationships with clients to make the most of this opportunity.
