Phew, 2022 was a crazy year! I'm in the office reminiscing all the year's events and figuring out where to start. Since this is the first time I'm writing such a post, I'll be candid and give you as much of an inside perspective as possible of the year gone by before 12 AM.
Our Growth
As we rightly anticipated, user growth has saturated across the industry after the markets peaked in late 2021, resulting in an increasing number of inactive accounts at many mid and large-sized brokerages. As most lockdown investors transitioned to WFO, volumes dwindled across the market. However, we grew 75% during the year in user additions, scaled 4 lac+ clients, and had an equivalent increase in trading volumes across exchanges. This year, we received an award from MCX for being the leading member in the Energy Segment (Crude Oil & Natural Gas). Our approach to sustainable growth and trader/active investor-centric offerings thankfully prevented us from "scaling up like crazy", as the benefits turned out to be transitory.
Products
- Our dream come true, App 2.0 was introduced at Christmas! Our tech team tirelessly worked on the app from start to finish amidst all the other parallel developments at FYERS. Many days, we'd be up in the office at midnight, debating and building the app till no end. Deliberating on the feedback and having a war of ideas was great fun! The full roll-out of App 2.0 will happen in a phased manner by January End. Currently, there is waiting. To skip the queue and get access, click here.
- This year, our primary focus was on making our platform more reliable, robust and scalable. I am happy to inform you that we have successfully completed a vital back-end upgrade that will significantly enhance your trading experience. To give you some context, Our systems can handle 20x the number of orders per second. While most traders and investors may not notice, going forward, it will enhance your experience in several ways. We have increased the depth of our capabilities with mission-critical software, i.e. Order Management Systems (OMS) and Risk Management Systems (RMS). We're confident of providing you with a more stable trading environment.
- We are among a few brokerages in India to have provisioned for a Disaster Recovery (DR) site to handle unexpected contingencies better and outages. We've made significant progress and should be live with this setup very soon unless we are slowed down by bureaucratic delays. While such work is not visible to customers, it is essential, so we invested our resources in it.
- We introduced Gifting! Our clients can gift stocks, MFs, ETFs, REITS, INVITS and more to their loved ones and friends on special occasions like birthdays, anniversaries and festivals. It is helpful if you want your gift value to appreciate over time so the recipients can make the most of it in the future. Read more about it here.
- We also introduced Minor Accounts. It helps to do 2 things effectively; secure your child's future through investments and focus on long-term investing. Adults can become fickle like kids with enhanced volatility. Hence, the best way to buy and hold is by doing it in your children's name. The time horizon makes you ignore the near-term price fluctuations.
- We took cyber security seriously and were among the first to introduce "Password-less login" with 2FA to enhance your account safety. We implemented an array of combinations for possession-factor authentication and knowledge-factor authentication successfully. We have also introduced Single Sign On (SSO). As a result, we've seen that customers can access their accounts seamlessly without the hassle of remembering passwords.
- We also enhanced order placement by introducing a brand-new order entry window on FYERS Web and several basket order refinements with an inbuilt margin calculator. These improvements save a few minutes in a trader's day, potentially translating to thousands of rupees in opportunity costs.
- My Account portal was refined with a detailed Portfolio Analyzer Report, E-Tax Filing with Quicko, online account details modification and segment addition features, etc.
- We introduced Buyback, Offer For Sale for investors and making the pledging process easier for clients. Our collateral margins align with NSE's minimum VAR, giving clients the maximum margin benefit without attracting penalties.
- Last but not least, we enabled NRIs worldwide to trade and invest through us. Historically, NRIs have struggled to invest in Indian capital markets due to the cumbersome KYC requirements. We worked hard to simplify NRI account openings to a great extent so they could get started quickly. We've also enabled F&O trading for NRIs through a custodian NRO NON-PIS route. You can read more about this here.
Risk Mitigation
- Most commercial enterprises are rewarded for taking risks, including investing and speculating in the stock markets. Ironically, the success of a financial brokerage hinges on the management's ability to avoid risks, non-compliances and practice uncompromising risk management. After sailing through 7 turbulent years of regulations for the industry without any collateral damage, we are confident and take our fiduciary responsibilities to our clients very seriously. For instance, we didn't offer our customers a popular product called "Digital Gold." Why you ask? After all, many others were promoting this product aggressively. The simple reason is that these were foreign entities operating outside SEBI's regulatory jurisdiction and offered warehouse receipts of gold that were apparently stored at a vault in Malta! An undetected fraud could destroy the confidence of millions of first-time investors who had invested in them. If investors want to buy digital gold, ETFs are readily available and stored safely in your Demat account with the depositories. Eventually, Digital Gold got banned, and now BSE will launch something similar called Electronic Gold Receipts (EGRs) with the SEBI's blessings. We will offer this to our customers in 2023.
- Another example is the sudden craze of investing in US Equity, particularly the "FAANG" stocks." Many intermediaries tied up with foreign brokers and took on the custodial risk of securities stored in broker pool accounts. On the other hand, we educated clients about existing avenues, such as MOSL NASDAQ 100 ETF and the FANG+ ETF by a different AMC, which were better, safer and lower-cost alternatives. We tried to add value to our customers in such ways.
- We successfully executed the running account settlements (Dual cycle of 30 days and 90 Days compulsory settlement of unused customer funds) without any delays or disturbances. To our surprise, clients transfer funds back into their trading accounts within 2 days of the first compulsory 90-day settlement. It indicates that our proactive and transparent practices are appreciated by clients.
- Also, by virtue of avoiding proprietary trading so far, we have prevented conflicts of interest with clients and any possibilities of nefarious activities which have plagued the reputation of many brokerages until the recent past. Recent regulatory steps by SEBI, such as Prop & client margin segregation, client-level fund segregation, and Demat Debit Pledge Instruction (DDPI) have enhanced the safety of customers' assets. We've been proactive and up-to-date with all the regulatory changes. From a conflict-free standpoint, it is perhaps the right time for proprietary trading. So far, we haven't started trading our own money, as we have many other things to focus on, but we may explore it in the future.
Financial Discipline
As a self-funded startup operating in a disruptive space, we understand the importance of financial discipline in spite of subsidizing fees. Amidst all the regulatory changes and the competitive market forces, we managed to scale up successfully without raising any funds. Despite significantly scaling up our tech infrastructure, building a talented team of 300+ and operating out of 3 offices, we continue to be profitable. Financial businesses, unlike E-commerce startups, thrive on prudence and gradual growth. Oh, and I almost forgot to mention that we are a debt-free company.
Our People
All the credit of whatever we've been able to achieve during the year goes to the enthusiastic and vibrant team we have at FYERS. While I represent them publicly, they're the ones putting in all the hard work and efforts to fulfill your expectations. The reason we've been able to innovate and keep up pace with your needs is due to their never ending passion. It's not uncommon to spot our first-shift guys burning the midnight oil at the office so you can have a seamless experience.
After we moved to our new HQ in Hebbal, Airport Road Bangalore, I thought some teammates' attitude may change as we are now working alongside some of the most well-known legacy Global MNCs (Osmosis). To my pleasant surprise, we hear that others around us are inspired to change while we continue to remain "A Lean Startup."
While 2022 was a horrible year for many startups across the board due to the funding crunch, we were unaffected because we're profitable and the business has sustained itself even during turbulent times. In fact, we hired top quality people when others were firing aggressively due to earlier excesses.
At our core, we want to enhance the capital markets ecosystem in India. I strongly feel that as an industry, we are still in our beginning days and there's a long way to go in terms of the changes required to help grow the market. So, we prefer to work with people who see the potential, just as we do. If you are exceptionally passionate and want to make a career with smart peers, you could check our openings and apply here.
What's Next in 2023?
We're working on many exciting features and product enhancements for you. However, we don't over plan too many things in advance. As a startup, we practice and preach the principles of the "Lean Startup" which is to Build, Measure & Learn in a continuous feedback loop. If you want certainty of our performance in 2023, one thing is assured that our product offerings will get even better and customer support will become more efficient. We've invested our time and resources to train and upskill ourselves, introducing processes and timebound SLAs to help cater to your needs more effectively. We really appreciate your patronage and patience. We wish you all the best and hope you will achieve great results in the coming year.
Happy New Year!