Why Brokers Rely on Third‑Party Tech and What It Means for Investors

Most retail investors think their broker builds and controls every part of the trading platform. The truth is quite different.

The hidden tech that runs a brokerage

Every broker relies on two core systems: an Order Management System (OMS) that routes trades, and a Risk Management System (RMS) that checks margins and limits. If either system goes down, trading stops completely.

Why most brokers use third‑party vendors

Specialised vendors provide these OMS and RMS solutions. The market is dominated by a few players – OmneNest, Kambala, 63 Moons and Rupeeseed – with OmneNest alone holding about 70% share. Even large firms like Zerodha use OmneNest for their core technology.

Why building in‑house tech is tough

• Risk of disruption: Moving live client positions to a new system can cause wrong trades or margin errors.
• Regulatory changes: New rules must be added instantly, raising the chance of bugs.
• Scale matters: Large brokers with hundreds of thousands of active clients would be “rebuilding the plane while flying it”.

What this means for investors

Because brokers don’t own the technology, they have less incentive to invest heavily in upgrades. Vendor costs have stayed relatively stable despite the huge growth in trading volume, so many firms stick with the same providers.

For investors, the key takeaway is that a broker’s stability depends on the health of these third‑party systems. Any outage at the vendor level could temporarily affect your ability to trade.

Remember, this is perspective, not a prediction. Do your own research before making any decisions.