What is that ‘black hole’ Who will swallow 100 lakh crores? Stir in Dalal Street due to Nitin Kamath’s revelations

Nithin Kamat Warning: India’s broking industry may be growing rapidly, but there is a risk hidden behind it, which investors hardly notice. Zerodha CEO Nitin Kamath has recently put forward this threat publicly. He says that the entire system of share trading is based on very sensitive technology and if there is even a slight mistake in it, trading can stop completely.

According to Nitin Kamath, most brokers do not control the core technology of their trading platforms themselves. They depend on third party vendors for Order Management System (OMS) and Risk Management System (RMS). These two systems decide how orders will be processed and how investors’ risks will be managed. Kamath described these as the “heart” of the broking business and clearly said that if this system fails, the entire trading will stop.

Only a few people dominate the broking industry

Kamath said that the broking industry is dominated by a few tech vendors. Names like OmneNest, Kambala, 63 Moons and Rupeeseed are prominent in this sector. OmneNest alone serves about 70 percent of the brokers, which also includes Zerodha. This centralization is the biggest risk. If for some reason there is a technical glitch in the systems of these vendors, the entire market may be affected. According to Kamath, this is why even a small disturbance can turn into a big crisis.

The biggest threat to the industry

Kamath also revealed that Zerodha has been working on building its own OMS and RMS systems for the last four years. But as important as this work is, it is equally dangerous. Shifting live client positions from one system to another is like recreating a flying aircraft in mid-air. A small mistake can result in trades going wrong, margin calculations failing or investors not being able to exit their positions at all. Furthermore, ever-changing regulatory rules demand new changes to the system each time, posing a new risk of breakdown.

Also read: ‘Bull’ roars in the stock market! Sensex closed with a jump of 638 points, investors became rich in a few hours

Stirred by Nitin Kamath’s warning

Overall, this warning of Nitin Kamath is against India’s rapidly growing Broking Industry It shows that weak link, which has been discussed very little till now. Investors may not be able to see all this, but behind each of their trades this delicate technical framework works, on which the entire market momentum It is resting.