While working at Barclays Capital in Singapore, Amit Gupta was closely watching the financial services space in India and the country’s evolving startup scene. He observed that while the retail investor base in India was growing, the existing brokers lacked effective customer service and the latest technology to scale operations.
On a trip to India, Amit met Parth Nyati at a startup event. Parth at the time was working with brokerage firm Swastika as a software developer, and was also handling customer experience. Both of them shared a common passion for trading. After exchanging ideas on how to address the gap in the trading market for the next few months, the duo launched TradingBells in July 2016.
TradingBells is an Indore-based discount brokering company that offers share, commodity and currency broking services to Indian traders. While delivery-based transactions attract zero brokerage on its platform, TradingBells charges Rs 20 or 0.01 percent of the turnover per executed order, whichever is lower, for intraday and F&O transactions.
The startup claims to offer high leverage of up to 22x on equity and up to 7x on commodity trading, as well as free trading demat account opening with zero balance for customers. Additional services include IPO investments, free market research tips and margin funding facilities. Thirty-five-year-old Amit, a commerce graduate from Mumbai and Chartered Financial Analyst (CFA) from the CFA Institute, US, says,
We believe that technology has the power to not only improve transparency in trading, but also improve productivity and liquidity, while at the same time reducing the overall cost to the broker as well as the trader.”
Amit has over 11 years of experience working across finance, product control and debt capital markets in Singapore, London and Tokyo. Parth, an alumnus of IIT Delhi, is a technology and finance professional.
To make TradingBells a faster trading platform, the duo has invested in technology such as Digital KYC, which is currently under development and will be released in the coming months.
The registration of the domain tradingbells.com cost the founders Rs 750, and a few thousand rupees (they did not disclose the exact amount) was spent on the initial setup of the office space and materials.
Discount broking, they believe, is an evolving concept, and not many people are aware of its benefits over the traditional approach. According to Amit, the existing discount brokers are still unable to offer value added services, such as higher leverage, IPO and mutual funds investing and margin funding, to their clients at reasonable prices.
Though the low brokerage plans of TradingBells were very attractive, the genuineness of the offerings seemed questionable for many. Traders and investors often look for trust in a broker besides low brokerage plans or a better product offering. Says Amit,
Being a startup and having hardly any client base to testify to our integrity, it wasn’t easy to convince the first few clients to open an account with us.”
He further adds that many traditional traders and brokers were not fully utilising the potential of advancing technology and preferred to rely on the traditional method of either visiting the broker or calling them to place a trade.
But they eventually surpassed these challenges by educating the clients on the ease and benefits of online trading. It eventually paid off, as most of TradingBells customers are now trading online independently, which helps is transparency, faster execution and lower costs.
Controlling cost and the road ahead
Since TradingBells offers zero brokerage plans on delivery-based transactions, their revenue comes from brokerage generated from intraday and F&O trading.
TradingBells raised Rs 2 crore in seed funding in December from Mumbai-based stock broker Swastika Investmart Ltd, Parth’s former employer, to strengthen the team, expand office infrastructure, upgrade technology, and for customer acquisition.
The startup currently has 300 users and 15 employees. To control cost, the startup aims to maintain a client-employee ratio of 300/1 by the end of this calendar year.
By the next fiscal year, TradingBells plans to achieve 60,000 customers and generate revenues of Rs 5 crore. In order to maintain the profit margin, it will not expand geographically, which makes sense considering that Indore has no dearth of talent thanks to the presence of both an IIM and an IIT in the city.
The online discount broking space has in recent times seen the entry of many startups, and a few of them are growing at a brisk pace. Bengaluru-based Zerodha claims to be a one-of-a-kind brokerage firm, with membership on all the stock, commodity, and currency exchanges in India and a flat fee-per-trade model. Mumbai-based Trade Smart Online provides a platform for transactions and the services essential to complete them, while Bengaluru-based Tradejini offers an integrated trading platform for equities, commodities, derivatives and currencies.