Those of us who have traded in stocks and shares know that the best trades are often backed by research. The better the quality of research, the higher the likelihood is to making profit. Impulsive or gut feel based marketing often gives poor outcomes.
Tipstop is a stock research platform. Brokers register on the platform. They share their research there. Investors register to access this research. They pay to join the site. Once in, they review the research shared by individual brokers. The investor can make an informed choice on the broker he wants to do business with. Before the Tipstop platform became available, investors had to connect with individual brokers to trade on the stock market. Selecting a broker was done more through word of mouth and not through comparative analysis.
It is a simple platform. Perhaps its utility lies in its simplicity. When I interviewed Aditya Mehta, the entrepreneur who conceptualized the platform, three hundred people had already joined the site. And the site was still to be officially launched. I believe that tipstop is now up and running and open for business.
Aditya is a broker himself. He is the son of Amit Mehta, one of the SEBI registered broker cum analysts with over thirty years of experience in the industry. Aditya has cut his teeth in the financial services industry in his father’s firm, where he worked as an analyst for a few years before launching his venture.
Aditya told me that two hundred and sixty brokers are registered with the Indian market regulator – the Services Exchange Board of India, known popularly as SEBI. Most of these people operate out of either Mumbai or Indore, two of the most prominent locations for stock broking. It is a close-knit industry. Aditya comes from a family of brokers; he knows most of the major players in the industry.
Even as the platform was getting built, given its utility, some brokers wanted Aditya to construct a platform exclusively for them. Brokers are people who understand money, and they know when they see a good trade. Tipstop appears a good trade for them. It was meeting a felt need, and here was one of their own who had come up with a solution.
Mumbai, India, is the center of stock trading in India. Bombay Stock Exchange and National Stock Exchange are the two major stock exchanges of the country. They account for nearly the whole of trading in the country.
The Securities and Exchange Board of India (SEBI) is the regulator for India’s stock market and related business. The major brokers are registered with the Board. India has around 25 million demat holders. It is estimated that about a hundred thousand trades occur daily on India’s stock exchanges.
In addition to the SEBI registered stock brokers, some banks also assist their clients in buying stocks on the market. These banks have tied up with brokers or broker aggregators who facilitate trade on behalf of investors. Research conducted by the Bank and the brokers becomes available to clients of these banks.
Another class of brokers is day traders. Many of these are very small. They try to make money by punting the market. Most such trades are based on gut feeling. Most day traders come from trading families.
Families and people have often been into broking and trading for more than a generation. Before the advent of technology and electronic trading, trading firms would keep hard copy records of investors, their trades, and scrips bought and sold.
Investors patronized an individual trading house, and both parties developed a bond of trust. Brokers would often pass on their loyal investor’s tips. Some of these resulted in great gains for investors. Brokers benefited from commissions for trades conducted through them. This tradition has continued. Brokers, even today, have loyal investor clients.
As Tipstop attracts brokers to join the aggregated platform, loyal investors of these brokers are likely to follow. Given that Aditya is part of this close-knit community of brokers, it is just a matter of time before many of the SEBI-registered brokers can register on the platform.
Today the startup entrepreneur has outsourced the platform-building work to an agency based out of Mumbai, India. However, to fully leverage the power of technology, the platform will need to be upgraded substantially. To do this, Tipstop will require access to the best available technical manpower. Small outsourcing platform makers generally have limitations and rarely attract top-quality hackers and programmers. I hope the outsourcing agency entrusted with building Tipstop is substantial enough to attract the best programming talent.
Brokers have access to a lot of institutional knowledge. This, as mentioned earlier, is often available in paper format. These documents must be digitized first to leverage this valuable institutional database fully. The knowledge contained therein can then be available for unlocking using various tools.
Maybe a combination of digitization, data scraping, data aggregation, and analytics will throw up insightful trends for the future. This can convert a simple idea into a potentially powerful decision support system if completed and deployed.
Aditya has access to domain knowledge. He probably needs to make efforts to access the appropriate technology to leverage his natural advantage. He should not be in a hurry to book profits; the Tipstop as an asset has the potential to give great long-term returns.