An Authorised Partner functions as an intermediary between clients and a stockbroker. In India, launching an Authorised Partner franchise is straightforward, but achieving success requires long-term planning and strategy.
Authorised Partners assist clients in equity investments while playing a crucial role in brokerage firms' strategies to expand their business. To start an Authorised Partner business in India, the first requirement is knowledge of financial markets and regulations. Aspiring Authorised Partners must register with the National Stock Exchange of India (NSE).
Who is an Authorised Partner?
An Authorised Partner acts as a liaison between clients and a stockbroker. Clients engage Authorised Partners for buying and selling securities. While providing all services, including security transactions, they are not members of stock exchanges and operate under a registered broker.
In return for their services, Authorised Partners receive commissions on the business they generate for brokerage houses from clients. Similar to brokers, Authorised Partner businesses must comply with regulatory guidelines set by the capital market regulator SEBI. Brokerages monitor Authorised Partners to ensure compliance with these guidelines.
Strategies for Authorised Partners
The first step in starting an Authorised Partner business is to enter into an agreement with a stock broking firm. Depending on the brokerage firm's guidelines, registration with the NSE may also be required.
Here are the key points outlining the step-by-step process and necessary qualifications to start an Authorised Partner business in India:
- Essential Professional Qualifications: A background in finance or a related field is essential. Without knowledge of financial markets, navigating the complexities of the financial world and stock markets would be challenging. A thorough understanding of stock markets and investment dynamics is crucial for starting an Authorised Partner business
- Necessary Certification: Authorised Partners must obtain mandatory certifications from the National Institute of Securities Markets (NISM) through the NISM series exams. These certifications provide them with a proper understanding of market regulations and ethical practices
- Office Setup: While most Authorised Partner businesses operate from an office, some brokerages may not require them to have a physical setup. Brokerages often assist in setting up the necessary infrastructure and technology for client onboarding, assistance, and trading
- Tie-up with a Brokerage Firm: After obtaining the required qualifications and certifications, Authorised Partners must establish a partnership with a registered brokerage firm. Upon signing the agreement, they gain access to the broker's trading platforms, technology support, marketing strategies, and client networks. Partnering with a broker simplifies operations by leveraging established infrastructure, brand names, and client bases
- Compliance with Regulations: Operating under a brokerage house requires strict adherence to all legal guidelines mandated by the NSE. Authorised Partners must uphold high ethical standards during client onboarding and trade execution
- Building a Client Network: Authorised Partners serve as the face of the brokerage house in client dealings. Establishing and maintaining a robust client network is crucial for local business expansion
- Market Trends Awareness: Staying informed about market trends and factors influencing stock markets is essential for Authorised Partners. Knowledge of new investment products enables them to provide clients with informed advice, giving them a competitive edge
Conclusion
Starting an Authorised Partner business is relatively straightforward due to minimal launch guidelines. However, achieving success in this venture requires long-term planning and well-crafted strategies tailored to target clients' needs.