Authorised Partner Agreement

The agreement defines the terms and conditions of the working relationship between the Authorised Partner and the broking house. The agreement typically lists the rights, responsibilities, and benefits of the two parties.

Authorised Partners help establish a bridge link between a stockbroker and an investor. An Authorised Partner works under a broker who is registered under the Securities Exchange Board of India (SEBI).

Authorised Partners sign an agreement to forge a partnership with the broking house. This agreement defines the terms and conditions of the working relationship between the Authorised Partner and the brokerage. The agreement typically lists the rights, responsibilities, and benefits of the two parties.

Importance of the Authorised Partner Agreement

The agreement is extremely important because Authorised Partners cannot start work without signing the agreement. Here are some of the benefits and rights stated in the agreement:

Rights and benefits of the Authorised Partner agreement

• The agreement stops stockbrokers from conducting any malpractices that may hamper the Authorised Partner’s relationship with their client
• The agreement plays a key role in dispute resolution as both parties must abide by the rules of the exchange and the SEBI. Typically, disputes between stockbrokers and Authorised Partners are resolved by the officials employed by the exchange but may be referred for arbitration
• The agreement allows both parties to terminate the agreement. If the agreement is terminated by the stockbroker, he/she needs to inform the exchange and clear any pending fees with the regulator

Now that you know about the rights and benefits an Authorised Partner gets as a part of the agreement, here’s a look at the responsibilities of an Authorised Partner.

The agreement between the two parties is a business agreement and clearly defines the code of conduct the Authorised Partner must follow. Here’s a look at the responsibilities of the Authorised Partner as per the agreement:

Responsibilities of Authorised Partner

• The agreement limits the maximum percentage of commission based on the transactions carried out by the Authorised Partner
• The Authorised Partner has to mandatorily maintain a meticulous record of all the transactions carried out by him and regularly keep the stockbroker in the know about them
• A clause within the Authorised Partner agreement prohibits the partner from changing the status of the agreement or changing any other detail without the consent of the stockbroker
• Authorised Partners are required to acquire the stockbroker’s approval to issue documents such as bills, confirmation memos, statements of funds, securities, and other such documents
• The partner has to mandatorily show all bank transactions and Depository Participant statement details to the broker
• As a part of the agreement, the Authorised Partner must allow time scrutiny from the broker on the partner’s records, deposits, client documents, and any other documents that show the large volume transactions carried out by the partner
• The agreement also states that the Authorised Partner is required to display the trading member’s display board stating guidelines for the investors such as the trading member’s contact details, compliance office, mode of payment, and regulations regarding receiving delivery of securities

Terminating The Agreement

The agreement can be terminated by either party without giving any reason. Once the agreement is terminated, the two parties need to collect the registration certificate from the Authorised Partner and submit it to SEBI. The two parties will also need to clear out the pending fees and arrears. The stockbroker also has to inform all investors through newspaper announcements regarding the dissolution of the agreement.

Conclusion

The agreement between Authorised Partners and stockbrokers describes the rights and responsibilities enjoyed by both parties. The agreement also states certain regulations that are to be followed by both the broker and the Authorised Partner. The agreement ensures that a partnership is based on integrity and transparency.