Tradier – Democratic Brokerage Service Based on API

 


By Vasyl Soloshchuk/ Insart

Site: https://tradier.com/
Established: 2012
Value proposition: Provider of a financial services cloud focusing on B2B integrations and open APIs for US-based stock and option trading.
The executive team: Dan Raju, Cofounder, Chairman of the Board, CEO
Jason Barry, Cofounder, CTO
Peter Laptewicz, Cofounder, President of Tradier Brokerage
Jeyashree Chidambaram, Cofounder, VP of Brokerage Technology
Paul H. Lee, SVP of Operations of Tradier Brokerage

Tradier is an API-based cloud brokerage platform that enables trading of securities to both self-directed investors and partnering advisors. At the core of their solution is a REST API, which allows other FinTech companies to seamlessly and quickly integrate their solutions and place orders using HTTP queries. The simplicity and usability of the API make it easy to provide variously focused brokerage services; this is why Tradier partners with other platforms on top of developing their own. Moreover, Tradier can withstand high loads while executing a vast number of orders simultaneously, thus remaining competitive.

To get more details first hand, I met with Jason Barry, CTO and Cofounder. He takes on the technical side of the work due to his development background. We discussed many technical aspects and I obtained an oversight of the role of API-based solutions for the industry today.

Like the other cofounders, Jason previously worked at TradeKing, which has been acquired by Ally. TradeKing delivered APIs while making lots of internal services available.

“We all recognized that we felt like there was a really good opportunity to take these APIs and build something really great that made a lot of these financial services available to anybody.”

The history of Tradier starts in 2012. Within about a year, Jason and the other cofounders raised about two million dollars to start the broker-dealer, register in 50 states, and build the tech. They assessed the real market need and grew their technology stack from zero to over 300 million API calls per month, with hundreds of thousands of requests per hour at peak times.

Renovating the API-based platform concept

Jason recognizes that the idea of providing an API for brokerage services isn’t new. There are several companies that have been providing APIs for much longer, such as Interactive Brokers. Nevertheless, their offerings don’t interfere with Tradier as there are many differentiators that ensure the company has its own customers.

“[Compared to Interactive Brokers,] our pricing models are very different and target very different investors. We offer really transparent fees and our API technology is vastly different, much more modern, as with REST-based APIs one can pretty much [integrate] from anywhere, [using] any kind of language.”

Unlike with Interactive Brokers, customers don’t need to set up servers, have them running all the time, and still have software in place, as everything is done in the cloud. In this way, Tradier ensures the house processes are well documented, as changes made without notice can greatly affect the partners’ businesses.

“We heard horror stories from other customers who have integrated with brokers where they wake up one morning and all their stuff is broken because a change happened back in the API stack and no one knew.”

Another differentiator is a strong focus on partnerships. To provide a seamless experience between customers and Tradier, Tradier works hand in hand with each partnering platform, allowing advisors running their own software. They aim to basically be a high-touch solution for businesses who want to engage in building financial tech services within their products or platforms.

“Then [regarding] the adviser [aspect], it gets even more high-touch because that’s very different. We are a broker-dealer and those advisers work hand in hand to come up with good solutions.”

Tradier platfrom

Tradier’s business model

Tradier offers trading on a lot of different securities. Jason states that they include anything that’s listed on the US exchange, which is over 900,000 securities. They trade heavily in options due to competitive pricing, and right now they’re doing hundreds of thousands of contracts a month in trades.

The platform offers users many capabilities:

  • Management of user and account data (e.g., fetching details on balances, positions, activity, and orders using a user or account number)
  • Watchlists to let users keep track of their interests
  • Streaming of events to provide live updates to market data in real time
  • Trading on simple and complex equity and option orders with simple request payloads
  • Real-time market data through HTTP request/response, which includes equity and option quotes, chains, expirations, strikes, and tick-based time and sales
  • Historical data for the past five days, as well as a long-term history

The pricing does vary, though. Discounts are available on the platform by working with the partners:

“We offer straight-forward commissions on equities and options at $3.49 and .35 cents a contract. We’re seeing a lot more customers use our subscription-based pricing, which is flat rate price where you can trade any amount of equities or options.”

Focus on high loads and speed

Tradier executes nearly 300 million API calls per month, which is a few hundred thousand transactions per hour across two different products—just under 150 platforms have signed contracts with them. Over last year, they had about 200–300% growth, and every partner that comes online is adding a lot more value. To keep up with this growth and engagement, they use improved architectures driven by AWS comprising over 50 servers/services. Jason states that Amazon is a key partner of Tradier, as it’s fully compliant with SEC/FINRA guidelines.

Also, Jason explains that they’ve been moving the systems to auto-scaling groups, though most of the company’s sustained growth is long-term.

“As most of our platforms come online we’re scaling the system up, so we [don’t] have to scale new systems on a daily basis. We’re scaling usually for weeks or months, and it makes it much more predictable from a billing perspective.”

To ensure a quick response, the platform itself was essentially coded for performance.

“All of our APIs are designed to handle 200–250 millisecond responses. A lot of our APIs come back in less than 100 milliseconds. If you’re on the West Coast, you’re talking 200 milliseconds round-trip.”

Tradier includes three Rails applications and eight web services, AWS infrastructure, and Apigee Edge implementations. They have a lean tech team, which uses Java for the APIs’ backend, Dropwizard framework and Ember.js for front-end. In addition, they use NGINX as a webserver for most of the application solutions.

He admits that though they initially chose XML for Tradier, they now wish they had built it using exclusively JSON.

“Most of the APIs are JSON based, though when we launched our product six years ago, XML was still something that people wanted to use, so we actually launched an XML-focused solution as well. If we had to rebuild all the stuff that we have today, we’d use JSON exclusively.”

Tradier platform

Security for customer privacy

Amazon isn’t Tradier’s only partner. To continuously deliver secure and risk-free services they have integrated with Apigee (recently acquired by Google), which helps them layer on some authentication components and use some of their protection services, such as Spike Arrests.

People send a lot of information to open a brokerage account, which is why the solution ends up being built around customer privacy. Jason states that all of the information that gets sent to Tradier is encrypted.

“Our adviser partners who use our APIs are sending us information always over a secure tunnel using SSL. We don’t offer any APIs that aren’t over SSL and we don’t store things we don’t need to.”

For regulatory compliance, they use a solution called NetDocuments. As a registered broker-dealer, they have to do AML and KYC checks, which they use a number of different partners for.

“Our clearing firm, Apex, does a number of checks, [and we also] do our own, so when you send us information, we go and check [it] out on the fly.”

Customer support and integration

Tradier continuously focuses on partnerships and gets a lot of feedback on their API. In some cases, they can configure their API to integrate with the partner’s product:

“When these guys need something, whether it be a feature of our API, or some sort of flow that we don’t already have, or a particular feature like fractional shares, we’re working with those guys to figure out how […] that solution fit[s] into what we’re trying to offer as a whole.”

Jason says they don’t want to customize the product for just one customer; they aim to satisfy the needs of all customers by finding good solutions within Tradier’s product offering.

“It would have been easy to just build them a custom API, but instead, we figure[d] out a really nice solution that any of our customers [can] use.”

For continuous integration, they use Travis. Also, they release some of their products at least once a week, although they limit changes so as not to harm their partners. New features can take time—even months—to release.

“Some of these things you just can’t test in a sandbox. That’s why we release a lot and test a lot internally.”

For those who want to become more technically involved, but don’t want to talk to someone about a contract, there’s a developer sandbox solution that offers a market data product and a couple other features. Partners who have signed a contract with Tradier can get a deeper demo:

“If they want to [they can] test real trades going through, and things like that, [as] we’re offering a fully emulated sandbox environment that replicates our production environment.”

The support team, Jason says, is also worth mentioning. Customers have lots of integration-type questions, so the team gets back to them as quickly as possible.

“I think our average timeline right now is less than 20 hours for all tickets, so most of our tickets or most of our questions get resolved within 24 hours.”

Plans and challenges on the horizon

Jason states that Tradier is partnering with Evati Advisory Services, which is looking to offer goal-based investing, similar to Betterment. In addition, the company is working with an advisor in Dubai called Sarwa. This partnership, Jason predicts, will help them to grow internationally.

“That’s […] pretty exciting, and they’ll be one of the first international customers that we have.”

However, Jason explains that there are a lot of different regulations when it comes to bringing onboard customers in other countries.

“We’re trying to make sure that we handle those things correctly and work with Apex on the process.”

Jason feels that the toughest thing is to modify the working business on the go. Moving from one step to the next takes a lot of commitment and dedication, not just in terms of focusing on new products but also with regard to making sure that the systems retain performance and stay secure.

“It’s not easy when you see 200–300% growth like we’ve seen. The car’s moving and you’ve got to be fixing things on the fly, while still moving forward and being innovative.”

Takeaways

Tradier is aiming to be the most intuitive and easy to use API-based brokerage platform out there. They have a growing client base and a huge amount of API calls. By utilizing REST API, they have become flexible and able to meet the needs of a very wide range of partners. Another great advantage of Tradier is their focus on partnerships with both self-directed investors and companies. This is a highly innovative approach, which is why it’s worth giving Tradier a go.


Interviewed by Vasyl Soloshchuk, CEO and co-owner at INSART, FinTech & Java engineering company. Vasyl is also the author of WealthTech Club, which conducts research into Fortune and Startup Robo-advisor and Wealth Management companies in terms of the technology ecosystem.