What does an authorized person do?
On May 5, 2022 by Albert WilsonIf you want to invest in the stock market, you must invest through an authorized person. An authorized person in the stock market is a professional who can help you navigate your way through the equity market.
Authorized persons act as a contact point between the investors and the stockbrokers to facilitate the investment process. They match your requirements, which are the best deals available to maximize your profit.
Who are authorized persons?
A professional authorized person plays a role under stockbrokers to extend investment facilities to investors. Their functions include buying, selling, and dealing with securities and assisting stockbrokers in enhancing their business. They build a business by bringing new investors and helping the existing clients reinvest.
The role of an authorized person in the stock market includes assisting investors with the investment by physically carrying out transactions, guiding customers with investment advice, and after-sale services to the clients.
However, in a stock market authorized person is not directly registered with the exchange. Thus, they work under stockbroking houses, creating a progressive business network for them. Working as an authorized person in a stock market allows you to act as an entrepreneur. With hard work and dedication, you can achieve immense income potential. Are you interested in becoming an authorized person? Here is the complete guide to enrolling yourself.
First, authorized persons must register themselves under SEBI. A contract should be drawn between the stockbroker and the authorized person that states the rules, regulations, right, and economic terms of both parties. Once you become a registered authorized person, you must learn about the role of an authorized person.
Role of an authorized person:
An authorized person in a stock market requires performing multiple roles on various frontiers. We can classify it under authorized person roles in the stock market, with a stockbroker, and with investors.
With the stock exchange:
In the stock exchange, authorized persons are not direct members. Hence, they don’t come under the first-hand scope of the stock exchange. But an authorized person carries out specific functions towards it.
An authorized person gains his franchise from a stockbroker. Upon receiving the franchise, the primary role involves offering helpful stock exchange tips to clients and assisting them in making better investment decisions. The prime function of an authorized person in the stock market is to maximize deals in his area.
With stockbroker:
An authorized person works under the brand of stockbroker and must perform a list of duties related to the broking house that appoints him.
Roles or functions of authorized persons towards stockbroker include:
Business development:
Here, the chief role of an authorized person under a stockbroker’s banner is to help them increase deals in his area. The authorized person in the stock market is responsible for enhancing business volume by sourcing many investors who are interested in investing in stocks and security.
Maintain quality of deals:
Authorized persons are the gatekeepers in the stock market, who prevent investors from submitting wrong documents to the stockbroker and uphold the integrity of the capital market.
Maintain transparency in deals:
The authorized person works collaboratively with the stockbroker in maintaining and documenting all files related to every transaction that passes his table. They work with the client’s interest in dividends, shares, bonus rights, and other assets. The authorized person should also help the stockbroker in replacing the documents marked as bad documents.
Assist stockbroker in sales:
An authorized person in the stock market must update stockbrokers about all the transactions by their customers and issue sales notes to them on behalf of the broking house.
With client:
Authorized persons are vital in helping traders maximize profit from their investment. It is a quality of an authorized person to identify good deals for clients and encourage them to invest more. Authorized persons are essential in the stock market, and without them, the capital market cannot function optimally.