A Sub Broker or Authorised Person offer often starts with a percentage: 50%, 60%, 70%, 80% or even more.
That number attracts attention, but it does not tell you your income until you know the base on which the percentage is calculated.
The phrase “net brokerage” is especially confusing because NSE has no single formula called Net Brokerage for AP revenue sharing.
NSE requires the Trading Member and Authorised Person agreement to cover commission sharing, but the broker’s agreement/payout policy determines the commercial definition of the shareable base.
What this Article Covers
- What gross and net brokerage mean
- Why there is no universal formula
- NSE rule on AP commission agreement
- Client taxes vs broker revenue
- Common deduction models
- Worked examples
- 70% share comparison
- Segment mix effect
- Clawbacks/incentives
- Payout statement reconciliation
- Agreement clauses
- Calculator methodology
- FAQs
Gross Brokerage: The Starting Point
For business modelling, gross brokerage is the brokerage revenue charged to mapped clients before the broker’s commercial revenue-sharing deductions.
But check the word “gross” against the broker’s statement, because some systems report brokerage differently by segment or include/exclude adjustments.
Net Brokerage: A Commercial Definition, Not a Universal Exchange Formula
In one broker agreement, “net brokerage” may mean client brokerage after exchange-related or statutory pass-through items have already been excluded from brokerage itself.
In another, it may mean brokerage after defined incentives, rebates, platform charges or other commercial adjustments. Therefore, copying a formula from another broker can be wrong.
NSE position
NSE requires the AP agreement to cover commission sharing and states that the AP receives remuneration from the Trading Member, not directly from clients.
This makes the written broker-AP agreement the correct starting point for revenue-share analysis.
Do Not Confuse Client Taxes/Levies With Brokerage Revenue
A client contract note can contain brokerage plus statutory/exchange items such as STT, exchange transaction charges, SEBI turnover fees, GST and stamp duty.
These are not automatically “brokerage income”. For example, NSE publishes separate schedules for transaction charges and statutory levies.
Your AP share normally depends on the broker-defined brokerage/revenue base, not the client’s total contract-note debit.
Five Common Commercial Models
| Model | Illustrative Formula | What to Check |
| Gross-brokerage share | Gross brokerage × share % | Whether “gross brokerage” excludes rebates/waivers |
| Net-brokerage share | Defined net brokerage × share % | Exact deductions used to arrive at net |
| Slab share | Base × share% linked to monthly brokerage | Slab reset and segment rules |
| Client/segment share | Different % by equity/F&O/commodity | Segment-specific payout |
| Hybrid | Share + fixed incentives/activation bonus | Bonus conditions and clawback |
Worked Example: Same 70% Share, Different Base
| Item | Broker A | Broker B |
| Client brokerage generated | ₹1,00,000 | ₹1,00,000 |
| Commercial deductions before share | ₹0 | ₹15,000 |
| Shareable base | ₹1,00,000 | ₹85,000 |
| Revenue-share % | 70% | 70% |
| AP gross payout | ₹70,000 | ₹59,500 |
| Difference | ₹10,500 lower despite the same headline share |
This is why you can’t compare a headline percentage in isolation. A 65% offer on a broader base can outperform a 75% offer on a narrow base.
50% to 80% Revenue-Share Example
| Share % | Payout on ₹50,000 Base | Payout on ₹1,00,000 Base | Payout on ₹5,00,000 Base |
| 50% | ₹25,000 | ₹50,000 | ₹2,50,000 |
| 60% | ₹30,000 | ₹60,000 | ₹3,00,000 |
| 70% | ₹35,000 | ₹70,000 | ₹3,50,000 |
| 80% | ₹40,000 | ₹80,000 | ₹4,00,000 |
These are arithmetic examples only. They assume the base has already been correctly identified and contain no GST/TDS/other business-cost modelling.
What Can Reduce the Shareable Base?
- Client brokerage waivers/rebates under the broker’s commercial policy.
- Reversal or correction entries.
- Segment-specific commercial charges defined in the AP agreement.
- Promotional/incentive adjustments.
- Bad-debt/negative-ledger or fraud-related contractual set-offs where permitted.
- Technology/branch/lead costs if the contract deducts them from payout rather than billing separately.
- Clawbacks linked to an incentive program.
Segment Mix Changes the Economics
Two APs with the same number of clients can generate very different revenue because equity delivery, intraday, futures and options have different client behaviour and broker pricing.
The key business metric is not just “clients acquired”, but brokerage generated per active client and the sustainability of that activity.
Reconcile the Monthly Payout Statement
- Export client-wise brokerage/revenue data for the month.
- Confirm which client codes are mapped to your AP code.
- Separate brokerage from statutory/exchange levies.
- Apply the broker-defined adjustments to reproduce the shareable base.
- Apply the agreed revenue-share percentage/slab.
- Add documented incentives separately.
- Subtract contractual charges/set-offs.
- Match the result with the payout advice and TDS/GST documents.
- Raise discrepancies within the contractual dispute window.
Clauses to Check Before Signing
- Definition of Gross Brokerage and Net Brokerage.
- Whether revenue share can change unilaterally.
- Whether each segment has a different share.
- Slab calculation period and reset.
- Treatment of client brokerage discounts/rebates.
- Technology/terminal/branch charges.
- Lead-generation charges.
- Set-off rights.
- Clawback rules.
- Payout date and statement format.
- Treatment after termination/cancellation.
FAQs
Is net brokerage the same for every broker?
No. Treat it as a contract-defined commercial term unless your broker provides a precise standard definition.
Are STT and stamp duty part of my revenue share?
They are statutory client levies, not automatically brokerage revenue. Use the broker’s actual payout base.
Can an AP charge clients directly?
NSE states the AP receives remuneration from the Trading Member and should not charge clients directly.
Is an 80% revenue share always better than 70%?
No. Compare the underlying base, slabs, costs, client ownership and support.
Final Takeaway
For a Sub Broker business, the percentage is marketing; the formula is economics. Before comparing brokers, rebuild the payout using the actual shareable base and a real sample statement.
That single exercise can prevent a large gap between expected and realised income.