TradeIt acquired. Any similar India opportunity?
Tradingview (TV) which offers a popular charting utility and also building a social network for traders recently acquired TradeIt for around $20 million dollars. This was after TV themselves had raised around $37 million in a VC round.
TradeIt has a really interesting business model — enable financial publishers and app developers to easily link users brokerage and investment accounts across most top brokerage firms with a single set of APIs. So everyone, from a financial news site to a stock trading game app to a charting platform to a social network for traders can easily integrate trading, not just with one brokerage firm, but almost all the top firms.
We at Zerodha opened up similar APIs called Kite connect to either build standalone exchange approved platforms or plug into our Kite trading platform. But these APIs allow only clients of Zerodha to place their trades. With someone like Tradeit, you could do it across all the brokers with only one set of APIs.
Possible to build Tradeit in India?
If you are a startup enthusiast, I am guessing the next question would be if a Tradeit can be built for India? If you could, all platforms from Moneycontrol to Economic times to all the robo advisory apps to everyone else would instantly turn into trading platforms for clients across various brokers. This would definitely help grow the capital market ecosystem in India. Think of what UPI (similar APIs allowing to connect across all banks) did for growth of online payments in India.
Unfortunately, the current set of regulations by the exchanges in India doesn’t allow this to happen. Exchanges mandate that any screen from where an order originates is an exchange approved platform. The tricky bit is also that the website/app/screen/domain from where the order originates has to be owned by the brokerage firm of the client placing the order. This completely rules out a single platform like TradeIt being able to power multiple brokers. Most of these regulations are from when internet trading started in India, hopefully, exchanges will take cognizance of changing times and remove some of these restrictions. Growing the very shallow participation in Indian capital markets has to be the biggest priority for all of us, and a platform like Tradeit can make it possible.
Is it possible?
Yes, there is still a way to build a business that can enable platforms to integrate trading across multiple brokers.
- Go to every broker, build a simple buy/sell web app, and get it approved by the exchanges.
- Yes, individually and separately across each broker. Which means you need to have a convincing enough story for the broker to make the effort.
- Once the publisher integrates your API, allow the client to select the broker of choice. If the client selects the broker and decides to place an order, initiate a web page of that particular broker, get the client to authenticate, and then place an order separately on this web page. If a mobile app, open a web view of the above within the mobile app. Btw, smallcase (a Rainmatter partner startup) is probably best placed to open up a feature like this now that they are already plugged into almost all the top 10 brokerage firms in India.
But the execution can’t still happen within the publisher website/app. Does it really matter if clicking on buy/sell (after authentication), the execution happens within the publisher web/app vs opening up another window and doing it? Of course, it does. Imagine if UPI transactions on Gpay, PhonePe, Paytm, Bhim, etc, needed you to log into your underlying banking mobile app to approve the transaction. It would have never taken off.
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We have built a platform where we have unified the OMS/RMS platforms of OmneNEST, as well as Kambala Noren – with whom we have integrated in a scalable way, using their C++ Admin APIs. This means, any broker who uses OmneNEST or Noren, is already completely compatible with our middleware platform. They need to run couple of our components in their infrastructure, and we need to integrate with them for authentication, and there is a scalable low latency layer available with multiple REST API formats and multiple language SDKs. Entire system is designed in an OMS agnostic way – so that it can be plugged into any OMS that provides a scalable C++ Admin API. This is used by a few brokers already, at decent scale. But at the moment it isn’t used as a multi-broker platform. If the regulations permit, probably this could be extended to a multi-broker platform?
Hi Nithin,
We worked on a product which does something similar. So instead of placing the order directly we deliver the order as a message to the respective Broker’s dealer, the dealer has to than executes the order manually. So that helps in doing away the regulatory bit. As an when the regulatory approvals are eased these could be automated as well.
We would like to give you a demo of the product if you and your team would be interested.
I suggest Zerodha to be a partner of Tradingview or intergrate TV in Zerodha for charting so that charting be an beautiful experience for Zerodha clients.
TradingView charts are already available on Kite. Check this.
Hi Nithin
I think there are two points:
a) Single API based access to trading across brokerages
b) regulatory hassle of exchanges saying trade origination should only be from broker software
Let me come to the second part first. Regulators need to be sure that people don’t come back to them and say look this trade happened without my knowledge – so any form of auto-trade will perhaps be regulated in India forever. But you could change this in some way in general – seamlessly allow customers to place or manage trades, once logged in. For instance, the Kite api allows us to open a browser with the basket pre-entered – this is done through javascript but it could as well be done with a URL itself (embedding the basket data as a parameter)
NOw a lot of trading is done via apps on teh mobile, but I don’t know (and don’t think) that brokers support a deep linking api access within a mobile app. You can do this inside of apps – for example, when you click an amazon link on yoru mobile, it will actually open theamazon app if you have it installed. You could have such a functionality to launch Kite (or a broker app) with information on the basket trade etc. and the app should detect and bring up a confirmation window for an ok.
For the first part, I believe Zerodha can play a big part in this. Eitehr define, or use a standardized API for trade execution, and push to standardize among brokers. This is effectively what is used by FIX, but FIX is inelegant and extremely painful to use. You could build a common protocol api that has to be implemented by every broker – and that becomes a standard for anyone else to build on. If one person then builds it for an omnesys backend and FT or even the NSE NOW, then it’ll work for a large number of users.
There are some existing standards, but each broker, even in the US has implemented in his own way: https://www.tdameritrade.com/api.page for example, or https://tradestation.github.io/api-docs/
Last part is data. Getting good data to create trades is also a pain in India. From adjusted stock prices (for bonuses/splits) to dividend history to financials to shareholding patterns. We have the data. But we don’t have a decent API access to it for a relatively low price, and I say API, not something like download a zip file that I have to redownload whenever data changes. People provide price data for a fee, but that’s the simplest part of it all – there’s so much more that can be provided and even used.
Look at https://iexcloud.io – that’s an exchange that gives data through APIs in the US. Quandl also has good data sets in the US.
Finally, there are test servers offered by NSE that provide replay of ticks all the time even weekends I think. If it’s possible to have sandboxes that place trades there to test and see how things would have worked, that will be cool. Or, if you have the data, build a sandbox that can test with past data replayed etc.
Lots of interesting things can be built here!
Cheers,
Deepak
Hey Deepak,
Yes, auto-trade where a 3rd party is initiating the trades, definitely a no-no. Will bounce some of the things you have written with our tech team. Some of what you have asked for is planned already.
Each of the top brokers has a different OMS/RMS provider, I don’t think it is possible to standardize APIs unless TR or FT becomes big enough. NSE NOW could potentially open up APIs, will help plug instantly onto over 200 small retail brokers.
Dividend and corporate action data, we have at Zerodha. We were just talking today in terms of how to expose. We don’t have other data, but let me speak to some of the startups who are working in this space and see if something can be done.
And yes, Sandbox has been on our list of things, let me see if we can do something to prioritize.
If each of the top brokerage houses take a miniscule share in my startup, then technically, they own the app/screen which will resolve the regulatory hurdle?
The app/screen from where the order originates has to be approved. So it doesn’t end if the brokerage holds a stake in the business. But we have been pushing exchanges to move away from such requirements, they ideally should be bothered only about the risk management software through which order has to pass through before hitting the exchange. Most developed markets don’t have these types of restrictions.
Good initiate..
It’s creditable for Zerodha to enrich their clients with market analysis and other interesting business models, which we are unaware of. Thanks for educating us