The PayBito chief highlighted how the reluctance of legacy broker solutions to adopt AI-powered trading tools results in missed opportunities for retail brokers and traders.
PALO ALTO, Calif., June 12, 2023 /PRNewswire-PRWeb/ -- The traditional broker models and conventional broker platforms have been slow to embrace AI-powered insights and trading tools, despite their potential to benefit traders. Institutional investors have already begun to use these tools to their advantage, leaving retail traders at a disadvantage. PayBito CEO Raj Chowdhury recommends embracing cloud-based BaaS innovation and reducing fees, broker platforms can create a level playing field and promote equity for all traders.
The AI Advantage in Trading:
The use of AI-powered trading tools can provide many benefits, including more reliable performance, greater efficiency, improved risk management, and a competitive edge. These tools allow for faster and more accurate analysis of market data and can reduce the impact of human emotions and biases on trading decisions. In contrast, emotional and irrational investment decisions can lead to losses.
Conventional broker platforms are deficient in cutting-edge AI features that are available on modern exchanges. Institutional investors with adequate resources leverage AI to generate consistent returns. Examples include Citadel Securities, Goldman Sachs, J.P. Morgan, BlackRock, Vanguard, and many more.
Limiting Access and Promoting Exclusion through Gatekeeping Framework:
The gatekeeping framework used by conventional broker platforms can lead to significant issues for non-institutional brokers, such as:
- High Membership Fees
Membership fees ranging from $5,000 to $500,000, along with opaque pricing structures and additional charges, can make it difficult for smaller brokers to enter the market.
- Lengthy Registration Process
The enlistment process can take up to six months, making it challenging for smaller brokers to establish themselves independently.
- Exclusion of Non-Institutional Traders
Membership eligibility is limited to institutional traders with high asset values, leading to exclusion of smaller traders who may not have access to AI-powered tools and resulting in a widening gap between small and large traders.
- Market Manipulation
Institutional traders have access to AI-powered insights and trading tools that give them an unfair advantage over the retail sector, leading to market manipulation and retail sector losses.
- Uneven Distribution of Transaction Data
Uneven distribution of real-time transaction data among brokers gives institutional traders an information advantage that may contribute to unethical transactional activities, such as front-running, where market makers place trades ahead of their clients to benefit from expected price movements.
- Preferential Discrimination
Despite penalization for illicit and unethical activities, the gatekeeping framework remains unchanged, and offenders, including those involved in insider trading, are not held accountable, leading to discrimination and further exclusion of non-institutional traders.
- Initiating Progress Through Innovation
For true global development and financial inclusion, it is necessary to bring about several changes within legacy broker solutions. Conventional broker platforms need to upgrade and innovate their existing systems to facilitate equal opportunities for all traders.
Algo Trading: Enhancing Transactions Through Advanced Technology:
As technology continues to advance, automated trading systems have become increasingly important in the financial world. These systems, also known as algos, use complex algorithms to analyze market data, autonomously execute trades, and provide valuable insights for traders.
Algo trading systems offer traders greater control and autonomy over their trades, with the ability to customize algorithms to their specific risk preferences. Additionally, automated trading systems can operate 24/7, enabling traders to take advantage of market movements at any time. While institutional investors have traditionally been the main users of algorithmic trading, these systems are now available to a wider range of traders through conventional broker platforms.
Initiating Change Through Innovation:
The PayBito Chief Raj Chowdhury explained, "AI tools have become ubiquitous, and the failure to offer equal opportunities can lead to blind spots and reinforcement of existing biases across trading"
To enhance financial inclusivity and foster impartiality, he recommended the following steps:
- Modernize with AI and algo trading options
The broker platforms should be upgraded by integrating modern features such as Data Engines that provide accurate market insights. These insights can be customized according to the user's risk appetite, and the brokers should continually evolve and innovate their platform to stay ahead of the competition.
They should also consider offering algo trading options across both the buy and sell side, as well as trading bots that can be set up within minutes. Investors should have the ability to customize their bots or assign bot options set by expert traders.
- Embrace cloud-based BaaS for inclusivity
Cloud-centric brokerage platforms can enhance financial inclusivity by providing brokers with affordable, user-friendly, and immediate access to brokerage services. Embracing Brokerage as a Service (BaaS) can eliminate the complexities associated with coding, server hosting, and other technical components.
- Decrease setup expenses for diversity
To entice novice traders, the broker platforms should decrease setup expenses to break down entry barriers and welcome diverse competitors to the platform. By attracting new traders, they can infuse fresh ideas and strategies into the market.
Modern broker platforms can offer instantaneous brokerage services for as little as $49.99 per month. Technological advances have also sped up the registration process; for example, platforms like PayBito complete the process within a few minutes.
- Lower costs and streamline operations for democratization
Broker platforms should prioritize scalable brokerage services and financial inclusivity by lowering costs, relaxing eligibility criteria, and streamlining operational difficulties. By democratizing brokerage services, they can foster impartiality, clarity, and greater regulatory supervision.
- Support independent brokerage with white-label solutions
Broker platforms can offer aspiring brokerage entrepreneurs and firms white-label broker solutions that provide free trials, customization, and self-branding capabilities. These solutions can empower entrepreneurs and firms to build independent brokerage enterprises.
- Leverage AI for real-time data integrity
By leveraging advanced algorithms and machine learning models, brokerage firms can detect and prevent insider trading in real time. This also enhances regulatory supervision and fosters impartiality and clarity, making the market more transparent and fair for all participants. Overall, AI-powered trading and real-time data can significantly improve the integrity and trustworthiness of financial markets.
Encouraging Social Responsibility: Brokering World Hunger Away:
The role of brokerage intermediaries extends beyond profit-making. By participating in charitable causes and campaigns like Brokering World Hunger Away, brokers can contribute positively to society. PayBito's initiative involves matching brokers' earning commissions and donating equivalent funds to feed starving children globally. This approach promotes social responsibility among brokers and ensures that their profits are used for the greater good.
Looking Forward:
Legacy broker solutions must recognize the benefits of algorithmic trading and AI-powered insights. By embracing these technologies and promoting an open culture, they can provide retail traders with equal opportunities and reduce market manipulation and financial exclusion. It is crucial to create an inclusive financial system with reduced entry barriers and AI-powered tools for greater efficiency and equity.
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
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