The PayBito CEO explains how legacy brokerage models are misfits in modern times, contributing to insider trading and market manipulation, and proposes the cloud BaaS solution.
PALO ALTO, Calif., June 8, 2023 /PRNewswire-PRWeb/ -- Exchanges drive up a notable segment of the world's economy, with brokers across the globe facilitating transactions among countless investors and traders. Tech innovations, despite their potential to transform business operations, have yet to make their presence felt across the major conventional exchange broker models. The negligence towards modern solutions is fostering financial exclusion through limited broker access and institutional favoritism, restricting non-institutional traders. PayBito CEO Raj Chowdhury explains how institutional investors control these seemingly random variables to control the entire stock market trajectory.
Brokerage Model Discriminations:
Conventional brokerage models have led to several discriminations that have given an unfair advantage to wealthy institutional investors. Apart from unequal access in terms of entry into the market and information, there are discrimination and constraints routing from transparency, time, cost, eligibility, and more.
- Transparency Hassles: Uneven Distribution of Real-Time Transaction Data
The uneven distribution of real-time transaction data among brokers creates an information asymmetry that gives institutional traders an unfair advantage and leaves non-institutional traders at a disadvantage. This disparity can contribute to unethical practices such as insider trading and front-running. Market makers often have access to this data, enabling them to engage in front-running and resulting in significant losses for their clients, further eroding the confidence of the retail sector in the fairness of the market.
- Limited Access to AI Tools and Trading Options
Institutional traders have exclusive access to AI-powered insights and trading tools, which gives them an unfair advantage over the retail sector. This advantage allows them to manipulate the markets as per their requirements, resulting in retail sector losses that indirectly convert into institutional profits. The retail sector is left with no choice but to compete with institutions, leading to significant losses.
- Exclusion of Non-Institutional Traders
Conventional broker platforms' gatekeeping framework favors institutional traders with high asset values, excluding non-institutional traders who may not have access to advanced trading tools. This exclusion leads to a widening gap between small and large traders and, consequently, reinforces the dominance of institutional traders in the market.
- Bias Discrimination: Immunity To Consequences
Many conventional broker platforms have failed to change their gatekeeping framework despite penalization for illicit and unethical activities. Offenders, including those involved in insider trading, are neither stripped of their membership status nor held accountable for their actions. This lack of regulations can lead to discrimination and further exclusion of non-institutional traders.
- High Membership Costs Aggravate Financial Exclusion
The cost of joining traditional broker models can be exorbitant for non-institutional brokers. Membership fees can vary from a few thousand to several hundred thousand dollars, with hidden fees and an unclear pricing structure, making it tough for smaller brokers to enter the market. A new brokerage participant is expected to jump through several regulatory loops and pay a start-up cost between $5,000 and $500,000 across exchanges like NASDAQ. This high cost of entry creates a significant disadvantage for non-institutional traders.
- Lengthy Registration Process
The registration process for legacy broker solutions can be lengthy and time-consuming. New participants need to start as institutional traders, work their way up, and go through a rigorous registration process of a minimum six months, making it challenging for smaller brokers to establish themselves independently.
- Lack of Cloud-based Quick Sign-up and Brokerage as a Service
With a lack of cloud-based solutions, brokers have to rely on a third-party IT solutions provider to host and integrate servers. The technical exclusion makes the stock market a breeding ground for a singular demographic of individuals restricting the market's potential growth.
Incidents of Market Manipulation Across Legacy Broker Platforms are not Uncommon:
Small-time brokers lack access to real-time data and advanced AI tools, leaving them vulnerable to the manipulative tactics of larger players who can skew the market with large orders and use non-public information to profit at the expense of others. These actions have contributed to numerous incidents of market manipulation and insider trading, including the 2008 Financial Crisis and the Bernie Madoff Ponzi scheme.
Change is the Only Constant in the Cycle of Evolution:
The PayBito CEO Raj Chowdhury states, "Legacy broker models have failed to keep up with the changing dynamics of the market, enabling insider trading and market manipulation. The current system is ripe for abuse and it's time for a change."
The PayBito chief believes trust is the foundation of any successful trading platform. By leveraging cutting-edge technology and robust security measures, it is possible to create a marketplace that is secure, transparent, and free from manipulation.
He proposed the following solutions:
1. Democratize Brokerage for Greater Transparency
Democratizing brokerage services creates a level playing field and promotes transparency, preventing market crises. It enables investors from all backgrounds to access real-time market data and AI-generated insights, reducing the risk of insider trading. Increased competition also limits manipulation and enhances regulatory oversight.
2. Standardized AI-Driven Trading Tools
Technology-driven broker platforms offer precise trading insights through data analysis. For example, PayBito's AI-powered data tool analyzes anonymous transactions, assigns weights, and ranks them across the neural network. It gathers news from various sources, measures market sentiments through impact analysis, and relays buy/sell signals to traders. With time, the engine becomes more efficient by learning from market trends and seasoned traders.
3. Make Algorithmic Trading Accessible to All
Modern exchanges have made algorithmic trading accessible to all traders. They can use pre-built or customized trading bots with adaptive algorithms. These platforms offer quick bot set-up, no downloads required, and a demo-testing option before investing. Traders can set up their bots within two minutes and access advanced trading strategies.
4. Revolutionize Brokerage with BaaS and Effortless Sign-Up
Brokerage as a Service (BaaS) is a game-changer for democratizing access to brokerage services. This innovative approach enables traders from different backgrounds to access brokerage services easily, promoting financial inclusion. With BaaS, there are no hurdles to overcome, such as coding and web hosting, making the platform scalable and user-friendly.
5. Ensure Affordable Brokerage for All
Cloud-based BaaS brokerage platforms provide affordable pricing and simplified sign-up processes. For instance, PayBito's broker platform enables users to register within three minutes and is priced at an affordable rate of $49.99 per month.
6. Promoting Financial Inclusion with Scalable Brokerage Solutions
In today's digital age, scalable brokerage solutions and financial inclusion are vital for global exchanges. The key to achieving widespread accessibility is by eliminating high costs and operational complexities such as coding, server hosting, and complex installations. Cloud-based platforms are the answer to these challenges, making it possible to enhance financial inclusion and empower brokers.
Brokering World Hunger Away: Fostering Social Responsibility:
Brokerage intermediaries have a significant role to play in society beyond their traditional role of maximizing profits. By supporting charitable causes and participating in campaigns like Brokering World Hunger Away, they can positively impact the world. PayBito's initiative matches brokers' earning commissions and donates equivalent funds to feed starving children worldwide. This socially responsible approach ensures that brokers are not only driven by profit but also contribute to the betterment of society.
Empowering the Future of Finance:
Legacy broker models favor institutional brokerage, creating a gap in financial inclusion and access to advanced AI-powered trading tools for non-institutional traders. To achieve a more equitable and fair financial marketplace, it is time to address the issue of unequal access to brokerage services and AI tools. Through sustainable innovation, it is possible to provide all investors with equal opportunities to succeed and prosper, regardless of their background or experience.
About Raj Chowdhury:
Raj Chowdhury is the Managing Director of HashCash Consultants and Paybito. Raj pioneered the first interbank Trade Finance and Remittance implementation of Blockchain Technology between two of the largest global banks. Raj is an eminent voice in the Blockchain and Cryptocurrency space and actively engages with policymakers in this area. He is a contributor to Economic Times, Business World, CNNMoney and advises industry leaders in the adoption of Blockchain. He is a member of Asha Silicon Valley, a nonprofit committed to education for children in emerging countries. Author of the book 'The Dark Secret of the Silicon Valley', Raj is an investor in blockchain and cryptocurrency companies and an active member of the philanthropic community.
Media Contact
Coleen Facete, Hashcash Digest, +14159662907, [email protected]
SOURCE PayBito
Share this article