A sub broker earns money by building and managing a client base for a registered stock broker. In simple words, the broker gives the platform, brand, compliance system and trading infrastructure; the sub broker brings clients, supports them, and receives a share of the revenue generated from those clients.
In India, the official term today is mostly Authorised Person, not “sub broker.” SEBI decided in 2018 to discontinue sub-broker as a separate SEBI-registered intermediary, and the practical route now is to work as an Authorised Person under a stock broker. NSE also describes an Authorised Person as an individual, partnership firm, LLP or body corporate appointed by a stock broker to provide access to the broker’s trading platform as an agent of that broker.
Main Source of Income: Brokerage Revenue Sharing
The biggest income source for a sub broker is brokerage sharing. When clients trade in equity, futures and options, commodities, currency or other allowed segments through the main broker’s platform, brokerage is generated. A part of that brokerage is shared with the sub broker.
For example, suppose your clients generate ₹1,00,000 brokerage in a month. If your revenue-sharing agreement is 60%, your gross share may be ₹60,000. If the sharing is 70%, your gross share may be ₹70,000. The actual payout may depend on the agreement, taxes, deductions, segment rules, minimum business conditions and broker policy.
This is why the business is volume-driven. More active clients, higher trading frequency and better retention usually mean higher monthly income.
Common Revenue Sharing Models
1. Fixed Percentage Sharing Model
This is the simplest model. The broker and sub broker agree on a fixed sharing ratio, such as 50:50, 60:40 or 70:30. If the agreement is 60:40, the sub broker gets 60% of the eligible brokerage and the main broker keeps 40%.
Many established brokers openly promote this type of model. Motilal Oswal mentions a 60% revenue-sharing structure for sub-brokers, while IIFL Capital promotes up to 70% revenue sharing for its Authorised Person model.
This model is good for people who want clarity. The more business you generate, the more you earn.
2. Slab-Based Revenue Sharing Model
In this model, the sharing percentage increases as your business grows. For example, a beginner may start at 40% or 50%. Once monthly brokerage crosses a certain level, the payout may move to 60%, 65% or higher.
This model benefits serious partners who can build a large client base. The broker rewards higher performance because the sub broker is bringing more revenue, more accounts and more market activity.
However, the slab conditions should be checked carefully. Some brokers calculate slabs monthly, while others may calculate them quarterly. Some may consider only brokerage, while others may consider active clients, turnover or product-wise revenue.
3. Hybrid Model
A hybrid model combines two or more earning methods. The sub broker may get brokerage sharing plus account-opening incentives, product commissions or performance bonuses.
For example, a broker may offer:
- Brokerage revenue share
- New demat account incentive
- Mutual fund or IPO-related earning
- Bonus for achieving monthly targets
- Extra payout for high-value clients
This model can be attractive, but the main focus should still be sustainable client activity. Account-opening income alone is not enough to build a long-term franchise business.
4. Product-Based Commission Model
Sub brokers may also earn from financial products offered through the broker’s ecosystem. These may include mutual funds, IPOs, bonds, insurance distribution, margin trading facility, loans against shares or other investment products, depending on the broker’s licence and business arrangement.
This income is useful because not every client is an active trader. Some clients may prefer long-term investing, SIPs, IPOs or wealth products. A smart sub broker does not depend only on intraday or F&O traders. They build a mixed client base with traders, investors and long-term wealth clients.
5. Branch Franchise Model
In a branch franchise model, the sub broker operates like a local branch partner of the stock broker. This usually requires more investment because office space, staff, local branding, computers and client service setup may be needed.
The revenue share can be better in some branch-style models because the partner is investing more and handling more client-facing work. But expenses are also higher. Rent, salary, electricity, internet, marketing and local operations reduce the actual profit.
So, a 70% sharing model is not automatically better than a 50% model. Net profit matters more than the headline percentage.
Can Sub Brokers Charge Clients Directly?
This is a very important point. An Authorised Person cannot freely charge clients separately like an independent consultant. NSE’s FAQ says an Authorised Person can receive remuneration such as fees, charges, commission or salary only from the stock broker and should not charge clients directly.
This means the earning should come through the stock broker’s approved payout structure. Taking unofficial fees from clients can create compliance problems and damage trust.
Example of Monthly Earning
Suppose a sub broker has 150 clients. Out of them, 60 are active traders. If each active client generates an average brokerage of ₹1,000 per month, total brokerage becomes ₹60,000.
If the sharing ratio is 60%, the sub broker may earn ₹36,000 gross. If the same client base grows and total brokerage reaches ₹2,00,000 per month, a 60% share may become ₹1,20,000 gross.
But this is only an example. Actual earning depends on client quality, trading activity, brokerage plan, market conditions, product mix, payout rules and expenses.
What Affects Sub Broker Income?
The biggest factor is not just the number of clients, but the number of active and serious clients. A person may open 500 accounts and still earn little if clients do not trade or invest. On the other hand, 80–100 quality clients can generate strong income if they remain active and trust the sub broker.
Income also depends on the broker’s brand, platform quality, customer support, research tools, mobile app, payout transparency and product range. A weak broker can damage your relationship with clients even if the revenue share looks high.
Best Revenue Model for Beginners
For beginners, a fixed percentage or simple slab-based model is usually better. It is easy to understand and easier to track. A new sub broker should avoid complicated models with too many hidden conditions.
The safest approach is to choose a reputed broker, start with moderate investment, focus on genuine client education, and build recurring revenue slowly. In this business, trust is more valuable than aggressive selling.
Final View
Sub brokers earn mainly through brokerage revenue sharing. They may also earn from product commissions, account-opening incentives, target bonuses and branch franchise arrangements. A normal revenue-sharing range may be around 50% to 70%, depending on the broker and business volume.
But the real success of this model does not come from the highest payout percentage alone. It comes from client trust, clean service, transparent advice, compliance discipline and long-term relationship building. A good sub broker does not just open trading accounts; they build a serious financial services business.
