Will an Authorised Person have similar obligations and liabilities that a Sub‐broker has?

No, an Authorised Person (AP) does not have the same obligations and liabilities as a Sub-broker, as the primary responsibility lies with the stockbroker.

1. Distinction from Sub-brokers:

The concept of “Sub-brokers” has been largely replaced by “Authorised Persons” under SEBI regulations. This shift brought about changes in responsibilities and liabilities.
Historically, Sub-brokers had a more defined and independent role, carrying a greater degree of responsibility.

2. Stockbroker’s Primary Responsibility:

The stockbroker who appoints the AP remains the ultimate responsible party. This means the stockbroker is accountable for the actions and conduct of their APs.
This framework is designed to ensure that stockbrokers maintain proper oversight and control over their agents.

3. Limited Liability of APs:

While APs are expected to adhere to regulatory guidelines and ethical practices, their liability is generally limited compared to that of the stockbroker.
APs act as agents, and their actions are typically attributed to the stockbroker.

4. Obligations of APs:

APs are still obligated to:

Comply with KYC norms.
Maintain accurate records.
Act in the best interests of their clients.
Adhere to the rules and regulations of the stock exchange and SEBI.

They are to perform the duties that the stock broker has appointed them to perform.

5. Liability of Stockbrokers:

The stockbroker is liable for:

Ensuring the AP’s compliance.
Addressing client grievances related to the AP’s actions.
Maintaining proper risk management.

6. Contractual Agreements:

The specific obligations and liabilities of an AP are often defined in the contractual agreement between the AP and the stockbroker.
This contract will define the duties and limitations of the AP.

In essence, while APs have responsibilities, the regulatory framework places the primary burden of liability on the stockbroker, reflecting the agency relationship between them.

Feature	Authorised Person (AP)	Sub-broker (Historical)	Stockbroker
Regulatory Status	Agent of the Stockbroker; governed by SEBI regulations.	Previously a defined intermediary; largely replaced by APs.	Registered trading member of the stock exchange; directly regulated by SEBI.
Primary Responsibility	Facilitates trades, follows KYC/AML rules, adheres to exchange regulations, and acts as an agent. Primary burden of compliance belongs to the stockbroker.	Had a more independent and defined role; carried significant responsibilities.	Ultimately responsible for all client trades and activities of appointed APs.
Liability	Limited liability; actions generally attributed to the stockbroker.	Historically carried a higher degree of liability.	Fully liable for their own actions and the actions of their APs.
Client Fund Handling	Prohibited from handling client funds directly.	May have had some handling capacity, but greatly varies depending on the regulatory time period.	Handles client funds as per regulatory guidelines.
Trade Confirmation	Prohibited from directly issuing trade confirmations.	May have directly issued confirmations in the past.	Issues trade confirmations.
Contractual Agreement	Operates under a contractual agreement with the Stockbroker outlining duties and limitations.	Operated under agreements that had variations based on the regulatory periods.	Operates under regulatory guidelines and exchange agreements.
KYC/AML Compliance	Must adhere to KYC and AML norms.	Obligated to compliance norms.	Obligated to very strict compliance norms.
Oversight	Operates under direct supervision and control of the Stockbroker.	Had more autonomy than APs.	Directly regulated by SEBI and exchange; responsible for AP oversight.
Compensation	Based on brokerage sharing agreements with the stockbroker.	Varied, but primarily based on brokerage and agreements with the broker.	Primarily from brokerage, commissions and other financial service revenue.

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