Market Intermediaries — Brokers, Sub-Brokers, APs
A stock broker is a SEBI-registered intermediary that acts as an agent between investors and the stock exchange — executing buy/sell orders, managing margins, i...
Stock Broker and Authorized Persons
A stock broker is a SEBI-registered intermediary that acts as an agent between investors and the stock exchange — executing buy/sell orders, managing margins, issuing contract notes and handling settlement. Authorized Persons (APs, replacing the old "sub-broker" category in 2018) are agents of the broker operating under his registration.
Every trade on an Indian exchange flows through a Trading Member (TM) of that exchange. TMs must be SEBI-registered, meet minimum net-worth (₹5 Cr for NSE/BSE cash; higher for F&O), pass fit-and-proper tests, and comply with hundreds of SEBI and exchange circulars. Authorized Persons (APs) are contracted agents of the broker — they source clients and can route orders using the broker's terminal, but all liabilities sit with the broker. Clearing Members (CM) may or may not be Trading Members; the four types are: Trading cum Self Clearing (TM + CM for own trades), Trading cum Clearing (TM + CM for own + others' trades), Professional Clearing Member (only clears, no trading), Self Clearing Member (clears own only).
The only entity that can directly place orders on exchange
Former "sub-broker" — operates under broker's registration
Settles trades; can clear own + others' positions
All client complaints land at the TM, not the AP
A Practical Example
| Member Type | Trades? | Clears own? | Clears others? |
|---|---|---|---|
| Trading cum Self-Clearing Member | Yes | Yes | No |
| Trading cum Clearing Member (TCM) | Yes | Yes | Yes |
| Only Trading Member (TM) | Yes | No (via another CM) | No |
| Professional Clearing Member (PCM) | No | No | Yes |
What Makes This Important
Frequently Asked Questions
You can — but SEBI will refer the complaint back to the broker under whose registration the AP operates. All legal and financial liability ultimately sits with the stock broker, not the AP.
🧠 Quick Quiz
2 questions to check your understanding