Can an authorized person participate in trading?

 

 

The financial markets are often complex and erratic. Professionals with in-depth knowledge of several investment instruments, market dynamics, and risk management techniques are required. This is where authorized individuals are useful. These people are in charge of carrying out transactions on behalf of other parties, including institutions, investors, and clients. Can they, however, trade for themselves is the question. Let’s investigate.

Who is an authorized person?

The capital market depends heavily on authorized persons. They facilitate share trading and create the broking house’s business book on behalf of both clients and stockbrokers. They offer each of their clients individualized trading solutions and assist them in locating the finest investment prospects. Can they, however, exchange for themselves? It’s a frequently requested question, both by our clients and authorized agents. However, let’s examine a few more facets of an authorized person’s business before providing a response to the query.

An authorized person (AP) is a person designated by a stock broker to act as their agent and grant access to the stock exchange’s trading platform. An LLP, a corporate entity, a partnership firm, or an individual can all be considered an AP.

Authorized individuals are employed by broking companies and are a part of their larger network of authorized individuals. They are registered employees who are qualified to provide share trading services to any potential stock market investor.

Can a person with authorization trade for themselves?

• As an individual, you have the option to trade as a stockbroker customer under your own name or the name of your near family, which includes your spouse, dependent parents, and dependent children.
• As a stockbroker or customer, the AP may trade under its own name as well as the names of its partners, directors, or promoters if it is an LLP, body corporate, or partnership business.
• In all situations, the stock broker and the stock exchange need the AP to provide the specifics of his trading account. He has to make sure that there are no conflicts of interest with the stockbroker’s clients. The code of conduct, margin requirements, and other guidelines that apply to the stockbroker’s clients must be followed by the AP.

What are the benefits of being an authorized person?

• He might profit from his status in the industry. He can use the stockbroker’s research papers, which he can access and obtain first-hand market news from, to increase his profitability.
• He can put himself ahead of other investors by using advice, suggestions, and pointers.
• In addition to the return on his investment, he may receive a commission.
• He can use his familiarity with the newest instruments and methods to identify more advantageous investing prospects.
• Because of his knowledge and access to a variety of asset classes, he might feel more in charge of portfolio diversification and not need to use the services of another stockbroker.

What are the drawbacks of being an authorized person?

• Your trading account is constantly watched when you trade for yourself as an AP to make sure no unethical behavior or conflicts of interest occur.
• As an AP, you could not receive any assistance or direction from the stockbroker in bearing the risk and accountability for your trading choices and losses.
• If he trades on insider knowledge, suggestions, or recommendations that are not available to the general public, you can run into ethical or legal problems.

What are the prerequisites for becoming an Authorized Person?

• You have to be an Indian citizen.
• You cannot be younger than eighteen years old.
• You cannot have a criminal record that includes fraud or dishonesty.
• It is required to have passed the 10th grade or its equivalent exam from an accredited school with government recognition.
• It is imperative that you possess the requisite infrastructure, including sufficient workspace, tools, and personnel, to efficiently carry out the stockbroker’s duties

Authorized persons, formerly referred to as Sub Brokers, are crucial participants in the market. Once he has confirmed that he will not betray the stockbroker’s or his clients’ trust, the authorized individual may trade for himself.

With over three decades of track record as the top stock broking business, SMIFS can help you build a career as an authorised person.