uTrade Solutions doing a Red Hat in capital market tech

uTrade Solutions, a Chandigarh-based start-up specialising in trading technologies, has begun to target the London market, as its open source product has begun to attract the attention of some of the City’s investment banks.

The 35-person start-up, which provides technologies such as trading platforms, algorithmic trading, risk management and portfolio handling solutions, went live in 2011, focussing on the Indian market.

However, CEO and co-founder Kunal Nandwani, who spent five years at investment banks in London, says he soon realised the bigger opportunities lay globally and in the provision of open source technology. Earlier this year, the company opened an office in London’s Canary Warf, and acquired two clients in the UK – a brokerage and an investment bank – and is at the proof of concept stage with a number of investment banks on opportunities for collaboration.

“Capital markets are no different from any other area of commerce. Trading technology can and should be open source,” said Nandwani, during a three-month stint in London, where the company took part in a programme for early-stage financial technology companies, run by Accenture and 12 investment banks, in which seven start-ups from across the world were mentored by experts in the field, potential clients and venture capitalists. He notes that while banks have begun to use open source in some back-office areas, it is in the front office, including trading technologies that opportunities lie.

Nandwani estimates that investment banks in the UK spend $2-5 billion a year on technology platforms, only to end up with systems not dissimilar to their rivals’.

“If you are spending so much and the same as others, it shouldn’t be on construction, it should be spent on innovating.”

With banks already in possession of well-developed trading platforms, uTrades’ challenge now is to work with banks to identify areas which are replaceable, and which they could do “cheaper faster and more flexibly” as well as looking at the types of new products banks could need in the near future.

So far there are a handful of rivals globally in the area, including Eco Financial Technology, backed by Credit Suisse and Lodestone Foundation, backed by Deutsche Bank.

Nandwani believes that while it will take time to win over the largest banks – particularly in a highly charged regulatory environment – in a few years as the contributing community and the stability of the platform grow, it is inevitable that they too will turn to open source technology, thereby avoiding the duplication of work and enabling them to concentrate on better trading decisions.

uTrade Solutions, which Nandwani founded along with three friends, Ashish Grover, Harwinder Sidhu and Mayank Mathur, has raised around $1 million to date, has clients in India, Singapore and Dubai, and is close to breaking even. Last year, Nasscom included the firm in its Emerge 50 2013 list of technology start-ups.

Along with its new plans to target top tier investment banks in the West, Nandwani says the company has also identified clients in Indonesia and Turkey as also Africa.

“The products built for the Indian market are an immediate fit there,” he says.

Long term, uTrade Solutions has big ambitions, modelling itself on Red Hat, the highly successful US open source company that builds commoditised Linux operating systems. Nandwani hopes that the company will become the Red Hat of capital markets technology.

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