Why Deposits are not Required for Authorised Partners Explained

Serving as an Authorised Partner without a deposit is possible depending on the terms and conditions of brokerage firms. In most cases, starting an Authorised Partner venture requires a deposit and authorisation from a brokerage house. This deposit is required by the brokerage to allow the Authorised Partner to associate with them.

The surge in the Stock Market has increased the demand for more Authorised Partners in the industry. Many aspiring  to enter this space may wonder whether starting an Authorised Partner business without a deposit is feasible. The answer is not straightforward. In some exceptional cases, an Authorised Partner franchise without a deposit is possible.

Some stockbrokers, particularly new ones, may accept a zero-deposit fee from an Authorised Partner business. This fee also aids in expanding the Authorised Partner network for stockbrokers.

An Authorised Partner is registered under the exchange. Under this model, the Authorised Partner receives an initial deposit from the stockbroker to set up the business.

In most cases, starting an Authorised Partner venture requires a deposit and authorisation from a brokerage house.

Making a deposit with a brokerage to start an Authorised Partner business is typically necessary. However, this deposit amount varies among brokers. Some may demand an upfront sum, while others may specify a range, sometimes between ₹50,000 and ₹3,00,000.

Authorised Partners must pay a one-time registration fee of ₹5,000 plus applicable GST per segment. This registration is mandatory as many brokerages require Authorised Partners to register with the NSE before enrolment.

Types of Authorised Partner Businesses:

Master Franchise: When an Authorised Partner obtains a direct franchise from a broking house and starts a business, they receive initial support along with the brand name. Office space is typically required to start.

Remisier: Remisiers work on commission and generally receive lower percentages compared to franchises or other Authorised Partners. Their primary role is to onboard new clients and bring new business to the stockbroker; they do not conduct transactions themselves.

Introducer: Introducers provide prospective client references to brokers but are not directly involved in onboarding new clients. Stockbrokers pay introducers commissions when referrals convert into clients.

Conclusion:

In conclusion, starting an Authorised Partner business without a deposit is possible. However, having a deposit with a broker offers several advantages. An Authorised Partner with a deposit typically holds more authority and can earn higher commissions. The deposit also acts as a safeguard for the stockbroker against payment failures or delays.