Trading with other people’s money

Thanks @nithin for taking the time to respond and sharing your thoughts. I’m gonna consult with the advisors and proceed with this in consideration.


Sir, I admire your humility and down to earth ways. It is amazing that despite being CEO of Indian’s largest brokerage house and a self made billionaire, you find time to respond to general queries and guide people, which you are not obliged to but you do it anyway.
Just reading your posts on various forums and reading your answers is a great learning experience. Thank you.


@nithin I guess one way is to become an AP ,take dealers terminal, get confirmation by client and execute trades. And you can charge profit sharing too by invoicing client as consultancy services. There are many firms operating in this model and advertising openly too. It seems it’s the most compliant way. Also I think you guys also managed money in the same way.

Why India vix is trading in a huge range and why us vix is trading in a narrow range and why our bank and nifty 50 premiums are high on Friday mon tues and Wednesdays before coronavirus premiums used to be low

No, today you can’t do this. It was maybe possible 15 years back. If you get a dealer terminal, you can only take orders of what customers want to execute. If you decided to advice, you will have to become an RIA. As an RIA you can charge a fixed fees or % of AUM, profit sharing is not allowed. The ones who are openly advertising are working in the grey area.


Thanks :pray:t2:

Btw Don’t you think it comes to incidental to business activities of AP. Similarly like you being a broker can advise clients , CA could advise wit regards to taxes etc and charge charges for the same.

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No, this has been misused by many APs,brokers earlier. Employees are given targets to generate more brokerage and due to that mis selling happens, lot of conflict of interest arises for APs. Also most of the complaints pending on exchanges are because of this reason and this is one of the things which helped Zerodha to have a positive brand value.


You could do this when there was the concept of sub-brokers, who had separate registration with SEBI. All the illegal PMS that lost money and the resulting complaints meant that SEBI killed the concept of Sub-broker and Authorized person was introduced. Today an AP on their own isn’t even registered with SEBI.

Btw even brokers are allowed to charge only brokerage fees and can’t have any profit-sharing type of arrangement. It is just a matter of time before SEBI disallows brokers to advise without an RIA license.


Just wanted to compliment @nithin (without asking him any question :slight_smile: )
I have always wondered from where this guy gets all this humility… other people who are not even 10% as successful as him , tend to brag like hell on all social media platforms…

Hats off @nithin , you are an inspiration. You single handedly did wonders for the Capital Markets in India (atleast as far as retail participation is concerned)


100% agreed,he is carrying the attitude as like as Mr tata.

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Hi Nithin I am planning to set up a trading desk or proprietary desk, where traders will be trading using my company money. I will be hiring traders for trading with my money. The profit and loss will be shown in the company ledger. In this process there will be only one bank account for the company and there will be many traders (start with 5 no`s and to proceed towards 50 nos) trading using my company money. Traders will be paid a salary for their work. The profit and loss of the trader should be booked under my company name. can you please let me know how to proceed further for above scenario

P.S I read the article but unable to understand the process.

Should i start with LLP and get a alpha membership from NSE or will zerodha help me to get corporate ID`s for my traders.



To get around the entire need of being NBFC, if you are setting up LLP only for this purpose, you will need an alpha membership. Otherwise, you can set up a partnership firm (comes with unlimited liability).

Multiple IDs to operate one account isn’t really possible. The best way to do this is to dedicate one person who places all orders (takes orders from all your traders and places it manually). This person then can also act as a check to ensure no one is being too aggressive.

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One thing that comes to mind by this arrangement is that if I hire traders to trade in my account,I can very well make an arrangement to compensate them on profit share. And if this is possible then I can very well manage outside money too by executing trades on their account and that agreement could be legally enforceable too (not grey)since I am basically not advising anyone what to buy or sell .

As a business, you can hire traders to work for you. Trading on someone else’s account without being employed or doing this for multiple people is back to square one which we have discussed multiple times.

Okay btw are you aware of bse incorporating a subsidiary to manage activities of investment advisors and maybe from now on reporting and compliance might be managed by exchanges instead of sebi. Do you think this will make advisory process more efficient and bring in more transparency and accessibility here.

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Until now RIA didn’t really have any regulator actively monitoring them, I think BSE will end up acting like a first level of regulator for RIAs. Similar to how for brokers, exchanges act as a regulator.

No, I don’t think what you mentioned will really change. Rules on how RIAs can operate is defined by SEBI, that doesn’t change with this.

i have an Pvt Ltd company, can we trade using this ?any suggestions.

Hi Nithin
Can I trade for foreign prop firm? Bcz I guess this can be treated as service only…

Also what company format will be appropriate for this kind of foreign service? Sole proprietorship or partnership is ok or Pvt Ltd is needed?


Hi Prakhar,
Bit confusion … If I trade other’s account then is it legal?

If you trade on another’s account, it isn’t really illegal as long as the customer gives you access to it. But if you take money from that customer for managing the account, then it is illegal.

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