Once you finish your KYC with your broker you are allotted a unique client code. You need to link your demat account with your broking account for seamless debit and credit from and to the account. You will also be required to furnish a margin cheque to your broker before you start trading with your broker. SEBI insists that brokers should not allow investors to trade in the equity market without adequate margins placed with the broker.

Let us first look at how to place orders through your broker?

There are a variety of ways for you to place orders through your broker once your basic KYC and other formalities are completed. Firstly, you can visit your broker’s nearest trading room and place orders directly on the dealer’s screen. This is the mode many traders prefer as it is simple and they get the feel of the live market. Secondly, you can place orders via phone. Most brokers will have dealers who are dedicated to placing orders on phone. For safety sake, the broker may insist that you call only from your registered mobile number when placing orders on phone. Thirdly, there is the facility of placing orders directly on the internet. Known as online trading, all the large brokers offer this facility. In online broking you can place the order yourself on your computer or your Notepad. Of course, the order will still routed through your broker only.

Let us also understand what exactly do sub brokers do?

A broker needs to have presence across cities so that they can capture clients across different geographies. There are two ways a broker can have presence in various cities. A broker can either open branches at all centres. This becomes expensive and they may end up managing a very large set up. Alternatively, the broker can appoint sub-brokers to execute orders on their behalf. A sub-broker is a professional with good contacts in a particular region. When the sub-broker registers with a broker, then he brings the clients too. The advantage for the broker is that the sub-broker gets his existing clients and at the same time the broker’s costs become lower. Of course, the broker needs to share brokerage with his sub-broker.

As per SEBI regulations, just like brokers need to register with SEBI, the sub-brokers also need to register separately with SEBI. Both brokers and sub-brokers are regulated by SEBI. The broker is finally answerable for all the trades done by the sub-broker and the entire back-office operations, including that of the sub-broker, is managed by the broker.