Now Australian New Yorker Michael Giles has started Third Party Trade (TPT), a fintech start-up that is looking to work with local stockbrokers to enable Aussie investors buy and sell US shares like Apple, Tesla and Facebook much easier.
“We like to say that TPT is a new kind of online broker, and it really is,” Michael told Anthill. “We have taken the core features of an online brokerage and productized it into a REST-based API platform.”
“In short, any user of our API, usually an Australian online broker or other foreign online broker, can develop any brokerage or wealth management related application using our infrastructure to directly access the US stock and options market.
“It’s faster, cheaper and better than doing it all from scratch. If you can think of it you could probably build it using Third Party Trade.”
How exactly does Third Party Trade work?
TPT can support any type of product model, such as an online trading or wealth management product (think robo-advisors for the latter), as well as any delivery method, such as web or mobile.
It provides access to a US broker-dealer, account creation and management, account funding to move money between a bank account and trading account, the ability to buy or sell stocks and options, and many other features that are core to being an online brokerage, but all delivered through APIs.
Let’s use an example of an Australian online brokerage that offers their clients access to Australian stocks but wants to throw US stocks on the menu too.
That Australian online broker could integrate TPT’s API services into their public website, for things such as account creation, as well as trading and related functionality into their client trading portal before or after the client account has been created and funded, in the case of paper or live trading.
Their client can then log into their online broker trading portal, check their cash balance, place trades, view their portfolio holdings and everything else TPT’s APIs offer.
Another example could be a US entrepreneur that wants to build a mobile trading app.
The entrepreneur could integrate TPT’s API services into their mobile app for account creation, funding the account, trading through the account and checking their cash balance and portfolio holdings. They could use their finger to “sign” the account, and take a photo of their ID directly from the mobile app.
As far as revenue goes, TPT either earns brokerage commissions, asset-based fees or share in the revenue of subscription fees.
“Working with the partner, we agree on a retail fee, if any at all, they would like to charge their end users through TPT, and we provide our service to the partner on a wholesale basis thereby allowing the partner to generate revenue from it which forms the revenue model for their own business,” Michael explained.
What is the story behind Third Party Trade?
Michael started out investing in stocks when he was about 12 years old and has been involved in fintech his entire career since getting his first job at Computershare when he was 19 years old.
His first start-up was OneTrade Stockbroking, an award-winning online brokerage that he worked on for about six years before it was acquired by MDS Financial Group. Michael then moved to New York to complete his Masters of Entrepreneurship & Innovation.
While in New York he founded Roboinvest, Inc which was intended to be an automatic investing service but Michael ended up pivoting to make it more social. The start-up got early traction and he exited it to a US brokerage firm but still retains equity in it.
It was late last year that Michael began working on his third start-up, Third Party Trade.
“For a few years I had been questioning why every new brokerage or wealth management start-up was rebuilding the same infrastructure with the only difference being a unique front end, or mouse trap if you will,” he told us, about the inspiration behind starting TPT.
“They all used the same clearing firms, back office and access to the markets, but their value proposition was in their product that users interacted with.
“It became abundantly clear that if the infrastructure layer of online brokerage was available as a service, similar to integrating Stripe for payments or AWS for hosting, then fintech businesses and entrepreneurs could get their products to market much quicker and cheaper without needing to worry about the hassles, expense and compliance of being a regulated broker-dealer.
“They just need to focus on building the best product and user experience. We are product, pricing and front end agnostic. Everything is completely white-labeled for our partners.
“In the future, we would like to look back and show that we have built the brokerage layer of the internet, so that if anyone out there was thinking of building a stock brokerage or wealth management related product or an entire company, they would think of TPT. That’s where we ultimately want to be.
TPT officially launched back in June and though they raised a very small amount of capital earlier this year, the venture has largely been bootstrapped and Michael plans to keep it that way for now.