Submitted To:

Dr. Mohit Jamwal

Submitted By:

Name: Sourav Jyoti Nath

MGNM575 Reg. no.: 11900244

Section: Q1920
Emerging Technologies for Managers Roll no.: RQ1920A01
Democratizing Algo and Quant Trading for Retail Investors:
RAIN, the Netflix of Stock Trading

INTRODUCTION:
As per a report of SBI, the number of individual investors in India increased by
142 lakhs in FY21, which in turn increased the share of individual investors in
total turnover on stock exchange from 39% in Mar’20 to 45%.
Now, majority of these new investors are newbies to the game of investing and
trading, with moderate to low capital at around 1-5 lakhs. The safest option for
new investors with less knowledge in this field is putting their money into
mutual funds, but with capital relatively low the returns generated are not
significant, even if invested for a longer period.
For investors wishing to gamble for a faster growth, stock market is the way to
go. But Indian stock markets stay open only from 9:15 am to 3:30 pm, Mon-Fri,
which conveniently coincide with the working hours of majority of such
investors.
If only there were any technology automating their trades and investments.
Enter RAIN Technologies.
Co-founded by Harsh Agarwal and Raghu Kumar (founder of Upstox) in 2020,
RAIN Technologies is a fintech start-up that helps investors automate their
investments and trades.
Headquartered in Bengaluru, RAIN Tech uses algorithms and quantitative
aspects to automate trading decisions.
RAIN is a B2C platform best described as a marketplace for algorithmic
trading strategies. It helps users who already trade online using companies
such as Upstox and Zerodha plug in their accounts on the platform, pick
strategies posted by various brokers from all over India, and invest in those
trading strategies.
MAJOR APPLICATIONS OF TECHNOLOGY IN BUSINESS:
RAIN enables professional traders and investors to set up their tried & tested
algorithms in the form of strategies on their platform which other traders can
subscribe to for a fee.
Algorithmic trading uses codes and computer programs that follow a defined
set of instructions to place trades. The defined sets of instructions are based
on timing, price, quantity, indicators or any quantitative model.
This automation of trading provides the following benefits:

 Trades are executed at the best possible prices.

 Trade order placement is instant and accurate (there is a high chance of
execution at the desired levels).
 Trades are timed correctly and instantly to avoid significant price
changes.
 Reduced transaction costs.
 Simultaneous automated checks on multiple market conditions.
 Reduced risk of manual errors when placing trades.
 Algo-trading can be back-tested using available historical and real-time
data to see if it is a viable trading strategy.
 Reduced the possibility of mistakes by human traders based
on emotional and psychological factors.

“RAIN is like the Netflix of the stock trading world. You scroll through
various options, and then you pick one thing to watch. Similarly, you sift
through hundreds of different trading strategies posted by traders from
across firms, and you invest in the one you like the most,” Harsh tells in an
interview.
COMPETITION ANALYSIS:
RAIN competes with AlgoBulls, Tradetron Inc, OctaFx Copytrading, and
Algoniti, among others.
OctaFx Copytrading enables users to subscribe or follow any professional
trader on their platform and copy their trades real-time, RAIN takes this
concept to another level, letting the users fully automate their decisions based
on algorithms instead of another person’s decisions.

Although the other companies serve in the same domain,

 AlgoBulls is still in its infancy stage.

 TradeTron is a foreign company, giving RAIN Trade the edge to capture

the Indian market. And with the founder of Upstox (one of the most
popular trading apps in India) as its co-founder, RAIN shall be easily able
to create and meet the demand.

 Algoniti, though being an Indian organization, has recorded negative

growth in the past years, rendering it virtually non-operational.

 Angel One and Zerodha have also come up with their algo trading
systems. But unlike Zerodha and Angel One, which allow only their
respective users to access their algorithmic trades, RAIN allows other
company users to plug in their accounts on the platform and trade away.
CHALLENGES FOR IMPLEMENTATION:
 Indian mass markets are inherently sceptical of new technologies,
especially the ones involving personal finances. It would be difficult to
convince people to trust a computer program handle their money and
investments.
 Legality of algo trading for retail traders: Though algo trading has been
legal for institutional investors in India since 2008, there are no
structured guidelines or regulations that have been set by SEBI with
respect to retail investors.
Algos expose their users to risks that include:
 Financial risks, for suffering substantial principal losses as a result
of erroneous trading activities
 Operational and Technological risks, arising out of inadequately
tested and monitored trading systems, networks, etc.
The company has to clear up any disclaimers and legal issues to not leave any
loop holes that can potentially open up the path of getting sued by clients.

REFERENCES:
 https://yourstory.com/2021/09/fintech-startup-rain-technologies-
making-quantitative-algorithmic-trading-founder-upstox/amp
 https://www.researchgate.net/publication/348739765_Nine_Challenges
_in_Modern_Algorithmic_Trading_and_Controls
 https://www.apollo.io/companies/Algoniti/5ed2a4b9604f5400018c2ccc
?chart=retention#employee-metrics