While the top brokerage firms have built their own systems and testing environments to churn out hundreds of algorithms, Quantopian is out to disrupt that status quo.
“For way too long, Wall Street has kept quantitative finance to itself by hoarding information and providing little transparency or accountability,” commented John ‘Fawce’ Fawcett, founder and CEO in the company’s release in January.
Parker sees the potential to grow the community beyond the U.S. into a global service. “Anywhere in the world there smart technical programmers, such as Russia, Eastern Europe and pockets in Africa, there is a market for our service,” said Parker.
The firm estimates that another 100,000 people are potential users, such as students at the Indian Institutes of Technology (IIT), known as the M.I.T. of India, who just as smart the people doing quantitative trading here. While most of the community will be new to quantitative trading, they will have expertise from other disciplines such as a PhD in physics.
As the community opens up more broadly, its target market could include Wall Street professionals who are interested in working on their own, suggested Parker.
Each post on the forum is about an algorithm and that is published to the community. The individual programmer can post the code and share it with the community. “You can clone their algorithm and tweak their code,” said Parker.
If someone is writing their algo on Quantopian, and sharing the code, who owns it? In response to these questions, Quantopian said: “Algorithms are kept private, and Quantopian is committed to protecting users’ intellectual property and keeping it safe. If users choose to do so, they can share their algorithms, so that others can see them. If they choose to share their algorithms, they still own them, but those algorithms are no longer private. Shared algorithms can be used and adapted by others.”
The power of the platform is that it’s opening up access to data and tools, providing more transparency into how algorithmic trading works.
Today, anyone who writes their algorithm on the system, at the press of a button, can test their algo against 10 years of historical equities data on a minute by minute basis for the past 10 years, said Parker.
Quantopian is offering the service for free right now as it’s focusing on building a large user base with the open community. In the future, Parker said there are a number of ways it can make money, whether it’s offering real trading and taking commission or by licensing its data.
Currently, it’s offering backtesting of algorithms, but right now the users are not able to do live trading. However, Parker said, the focus is on having right the tools to let people find the right set of algorithms. But in the future, it plans to launch a trading capability, said Parker.
