ValuePickr Forum

Sub Brokership - Queries

Do I get terminated as a sub broker if I cannot generate revenue/brokerage ? do I have to compensate for that issue by other means?

Suppose I took franchisee of Sharekhan and I fail to generate brokerage for the next 2 years. Will Sharekhan terminate me as their sub broker? And if so, will I get the security deposit back?

I doubt you will be able to get an answer to your query here on valuepickr. I doubt we’ve any members who are sub brokers. This is a forum primarily for investors. Please try elsewhere, maybe traderji forum or drop a mail to Sharekhan customer service directly?

You asked the same question on traderji also! Why dont you call your RM and talk to him about this instead of asking on every website.

Well let me ask this in a more straightforward way:

Is it possible for a simple sub broker to start his own Portfolio Management/ Asset management firm someday in future?

http://minancecapital.com/ Take lessons from this guy. He did it.
(Please remove link if its not allowed)

In my knowledge, Minance is not a Portfolio management or AMC because it needs a very high amount of deposits before you start one.

Their business model is just very simple.

People approach them. They get them registered with Angel Broker and sign an additional document of Power of Attorney (maybe) to access the portfolio of his clients.

Now even if the client makes any transaction by his own then it gets revoked in 5 to 15 minutes.

This not a kind of PF management company.

But the question remains unsolved - Is it allowed to follow this type of business model without any violation of SEBI laws?

For which, I have no clue.

Also consider reading this answer on Quora - https://www.quora.com/Is-Minance-certified-from-SEBI-as-a-Portfolio-Management-Company

Me and my friends did a detailed study on Minance. It is alot of things. But not the things it says it is. And sometimes it is those things. It has two portions. Angel brokers sub broker which is also the promoter of minance capital research. You are made a silent partner in the llp and your money is traded by the promoters on your behalf. Your money is being managed, yes. Is it and AMC on paper? No. But if you follow their business model its totally legit. Basically a llp is managing its own money through whatever account it chooses.

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Got your point but Is it legal to manage funds of clients through their brokering account without any specified SEBI approval (other than sub-brokership)?

That too on just a piece of paper of attorney or whatever.

In other words, is there any other eligibility criteria to manage funds of any third person?*

*educational qualification, SEBI registered Research Analyst, SEBI registered Investment Advisor or anything else.

What’s your opinion @masonicinvestor?

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@Sowmay
I feel one should get 2 types of ‘permissions’ from SEBI :

  • Permission to execute trades using other peoples money and provide them the contract notes (w/o notifying the clients about the companies he is intending to buy).

  • Permission to carry on research on his own and publish the research reports openly to the public/clients

Also, we need to know how organisations like minance share profits with their customers and what do they do if their customers suffer a loss

Why do you need permissions from SEBI to execute internal tasks? A partner notifying a partner about buying and selling in his partner’s account. Secondly there is no bar on carrying on research and publishing it openly. The only bar is against giving recommendations. In this case all transactions are done without notifying the other person so no recommendation is given. On the other hand, why would you even publish these reports? If the person needed reports he would trade on his own not approach a manager.

So you’re saying, if I want to invest in Minance, I would first have to become a silent partner in their firm then they will manage my funds, Is it?

Just like we have got websites where we can search for jobs( naukri / monster etc), do we have websites or other resources where we can compare and search for the best Portfolio management services ?

I was looking for some honest and straight forward information regarding the company called Minance.

All I know is they are sub brokers to Angel . And they go ahead telling people that they charge something like 20% on the profits they earn on clients’ money. Also they don’t share a dime of that with Angel.

Further, Minance does not own a SEBI registered portfolio management licence. How can they go on doing like this without SEBI authorization?

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