I do get queries on a regular basis as to how one can start a share trading business rather a franchisee of share trading. Viewing the downturn of the economic activities and thus the stock market fortune, most of the renowned brokers have taken initiative towards a franchisee based business model reducing the costs and liabilities with respect to marketing, salaries and other back office operations.
For a new starter the following points must be kept in mind before they could get into this kind of venture.
- You should have the office space, required computers and the broadband Internet connection.
- You need to conduct all the marketing staffs to get a good no of clients and thus good brokerage level.
- The mother company will provide you the technical assistants, the ODIN or BOLT or NEAT operation terminals (in fact the software).
- You have to put some deposit money to the mother brokerage house (depends on the region, the reputation and the service).
- Brokerage will be shared in the ratio such as 70:30, 60:40 and so on. Remember once you provide a good business on a regular basis, you will have the bargaining power on your part. Moreover, your client would like to negotiate over the brokerage rate. In that case, you have to be careful in allowing that person to the expected brokerage level (delivery and intra-day) depending on the volume of business that person provides.
- You have to incur the cost of the terminal trader. But if you have that expertise along with the required NCFM certificates, you can reduce the cost at once and increase the profit margin on the other.
- Get aware of some of the compliance issues like self trading, marketing protocols, know your clients etc.
Feel free to communicate if you require more information.