In the past few years, the Indian share market has been on a tremendous run with both benchmark indices hitting all-time highs this year. While a lot of factors have worked to make it happen, one of the driving forces has been the huge influx of retail investors.
Just last month, over 31 lakh demat accounts were opened. This influx of aspirational retail investors can be credited to some extent to the advancement of technology in the country’s broking space. In the past few years, several online brokers have come up and made access to capital markets easier for the common man.
One such online brokerage firm is Shoonya. The trading platform offers zero brokerage, zero clearing, zero account opening, and zero AMC charges to its customers. It recently also announced partnering with I Know First (IKF) to provide AI-based insights on stocks.
So, we caught up with Sarvjeet Virk, the co-founder and managing director of Finvasia, the parent company of Shoonya to learn more about the company’s plans and the changing landscape of the broking industry.
Shoonya – The Company
“The retail segment has never had easy access to the right information tools, there are even a lot of barriers to entry that these investors typically face when they start. So that’s where the whole journey started to build a commission-free ecosystem,” this is what Virk tells Benzinga India was the idea behind the company.
Virk explains that their model has been built up on the principle that buying and selling should never have a cost. “It’s just a data packet which you’re giving to us, it’s like a mobile app and then it goes to the exchange does a trade settlement and it just comes back. So at the end of the day, sending a data packet has no cost to it,” he adds.
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Virk states that the idea is to build a commission-free ecosystem for the retail trader and then present them with value-added products that they can use to enhance their trading/investing experience.
The AI Factor
The company recently announced one such value-added product for its users. So we asked Virk how exactly the AI model works and how it benefits the everyday trader.
“So it’s in association with an Israel-based company which was more actively building the same tools for institutional or bigger banks, hedge funds. But then we kind of sat down, started working, did a lot of backtesting, a lot of modelling, redesigning, and ultimately, we kind of reached to a level where we could start offering to our clients in India.
And this is exclusively for the retail clients on the Shoonya platform, it gives you a very interesting analysis of large, small, and mid-cap stocks depending upon what your investment horizon is. It analyzes over 1,500 stocks and then creates these very user-friendly decision-making insights.”
Virk added that while the AI model is currently available only for the equities markets, the company plans to diversify to include different asset classes such as derivatives, mutual funds, ETFs, bonds etc.
Earlier in the year, the company ran into troubles, when several users of the platform came forward saying that they had to incur huge losses due to a tech glitch on the platform. We asked Virk, about what exactly happened, and how the platform has worked towards ensuring something like that does not happen again.
“We had multiple follow-up discussions with regulators to walk them through what happened and more importantly, as part of our commitment, I think we are the first in the industry who compensated or settled the complaints per se with all our clients.”
Virk said that the company has paid around ₹5 crore in total as compensation to traders who incurred losses due to the technical glitch. He further explained that since it takes a lot of things working in unison to make sure trading goes smoothly, any hindrance in that results in such mishaps.
“We made sure that we had a third-party independent company to go through the entire incident and do an audit. So we got KPMG on board and they did the entire incident review. They shared the report which was then also submitted subsequently with regulators of the possible reason for that particular glitch. And as I said, there was no infrastructure fault it was purely a technical glitch. And then even moving forward, we have constantly evolved. We are trying to make sure that incidents like these do no not happen.”
The online brokerage space has a lot of major players, and a lot of others are looking to make their way in. With this increased competitive intensity, we asked Virk how he sees Shoonya navigating the space and making/keeping their place.
“I think we’re fairly doing good. Some competition is for good, right? I mean, it pushes us to evolve, to innovate and then create solutions that are more customised for the end clients. We at Shoonya make sure that what we are building is not for the short term, but has a larger and long-term vision to it. Our mission is always to emphasize technology and to get the right tools for the clients to empower them. I think those things always help us to stay on our toes and to keep innovating.”
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