The actual tech integration to allow buying/selling US stocks is really straight forward. Unlike in India, orders don’t necessarily have to go to the exchanges for matching in the US, it typically goes to liquidity providers like Citadel, Two Sigma, CODA, etc. These are simple integrations if you decide the route of being a broker in the US. An even easier way is to just integrate with international brokers like Drivewealth, Interactive brokers, Saxo, etc - which is what the current bunch of platforms in India who offer this facility are following.
The real problem to solve isn’t really the tech integration, but actually the very painful and expensive international fund transfer process.
Remittance & withdrawal issues
- Banks charge between Rs 500 to Rs 1500 for every single international fund transfer.
- There is another 1% in currency spread on the transaction that gets eaten up for every transfer.
- There is an A2 form that physically needs to be submitted and presented to the bank for international transfers for the purpose of investing. Some banks might pick up this document from your place, but it can take up to 2 weeks for the funds to show up in your international trading account. Two weeks of opportunity and interest cost.
- The same costs and time when withdrawing the funds back to India.
Most of our customers are those who will most likely transfer between $500 to $2000 at a time. In the current remittance regime, the customer will be down by up to 5% on the capital because of all the above costs immediately. So if someone did take all the effort to send money out, it isn’t really a good deal for them.
Of course, this starts making sense as the remittance amounts become larger (very small % of our client base), but for us to create an offering for our client base, it makes sense to do it only if we can scale it to all our customers. Also, this coordinating where the money being remitted is, when it will be updated, etc is bound to be a support burden if offering to a lot of customers.
So yeah, we are working on fixing the remittance problem first. That has to be solved for this business to make sense, both for customer and us. We will start showing market data feed for US stocks on Kite, but trading we will enable only once we have clarity on how remittance will work.