When evaluating the market for Spear, one of the coolest startups we saw was this not so little outfit called Quantopian, an algorithmic trading platform that exists entirely within the browser. More specifically, it is a paper trading and backtesting tool on steroids.
Quantopian provides an in-browser integrated development environment (IDE) for building out automated trading algorithms using Python. Customers can access 10 years of US stock market data to figure see how their strategy performed in the past. A notable feature in Quantopian is the ability to go from paper to real life trading seamlessly, without migrating or rewriting the algorithms manually, a big departure from older systems in use at bigger financial institutions.
While they are currently not monetizing their product directly, Quantopian does state that they’ll charge for live trading activity in the future. They are also building a community of amateur and professional algorithmic traders who share ideas and collaborate on their platform.
The company does not however intend to become a broker-dealer, which limits their regulatory risk but also puts a cap on their monetization options. (One major source of revenue in trading is the commissions generated when trades are placed.)
One long-term trend I see in this side of fin-tech is the progressive spread of ever more sophisticated trading techniques to people with less financial domain expertise. Quantopian lets anybody trade algorithmically, but you still need to know how the algorithms work (and knowing Python or programming in general is needed too.) It would be interesting to see platforms emerge in the future that removed those barriers to entry.