Hello,
I wanted to know if an Authorised person (AP) could do proprietary trading and investment in his own account ( prop account )
Could this route be an alternate to the NBFC pathway? Since RBI exempts stockbrokers/sub-brokers/AP from NBFC registration.
Does anyone with any info on this?.. And does Zerodha provide AP registration to Pvt companies who want to trade their own capital @nithin
Just needed someone to clarify on this. Thanks
SEBI removed the concept of sub-brokers many years back. Authorized persons are not exempt from NBFC registration if financial income is greater than 50% of total income. So being AP doesn’t help to trade own capital as a pvt ltd firm.
Thanks for your response @nithin . In one of the blog posts Angel Broking wrote that an Authorised person can trade on his own account but it would be subject to monitoring. Is there any truth to this?..
Also, is there any way to legally clarify whether Authorised persons require an NBFC licence or not like you said. Since RBI had previously exempted Sub-brokers, I thought why wouldn’t that same exemption be in place for AP as well?.. since sub broking as a concept has been replaced by AP concept.
An authorized person is allowed to trade for themselves, but this doesn’t get around the NBFC requirements for private ltd companies.
This was the reason why the sub-broking concept was removed as it was a loophole to get around the NBFC requirement. To legally clarify, you will have to reach out to a law firm.
Hi @nithin ,
I just spoke with the Hyderabad regional office of RBI and asked whether AP were exempted from NBFC registration,
They said since the core business of an AP involves dealing with stockbrokers/stockmarket it comes under the purview of NSE and SEBI and not the RBI.
Also, i thought sebi removed the Sub-broker concept due to the fact that there was no operational difference between an AP and a sub-broker and more and more people were registering as an Authorised person with the exchange as mentioned in this news article -
Anyways, I’ll get a second legal opinion from a lawyer too thanks 
( If this is in-fact true! Would Zerodha provide AP registration for Pvt companies who want to do proprietary trading because the interface and experience is just the best!)
https://www.rbi.org.in/Scripts/FAQView.aspx?Id=92
Authorized persons aren’t regulated by SEBI, but by the exchanges and stock brokers. RBI exempts companies that are regulated by other regulators like SEBI. So being an AP doesn’t help. I am 100% sure about it. 
Btw ,you can’t trust just because a media outlet says something.
You can speak to a law firm and come back to us. If this is allowed, we can figure out something, not just for you but for others as well.
Interesting!
Hi @nithin , after a long time I was able to get on the phone with the SEBI regional office and they have told me this -
'Proprietary trading by authorized persons would be permitted only on his own funds and securities and not by using any of the client’s funds, Sebi said.
So i guess after all AP’s can do proprietary investing in their own accounts.
Also, RBI clearly says in the NBFC exemption list that companies engaged in the business of “Stock broking” are exempted. Since Authorised persons are clearly engaged in the business of “Stock-broking”.
Would Zerodha now be open to giving AP registrations for companies looking to do Proprietary Trading on their account
I have verified this information by checking the SEBI CIRCULAR from July 2021
Here’s the link to the circular -
