e-FOREX : INTERVIEW
OANDA provides a wealth of information services related to currencies and is a foreign exchange market maker. Te spread that OANDA offers its trading clients is unsurpassed and is a big draw for traders— both retail and institutional—who are in search of the most cost-efficient and reliable platform to trade.
Olsen Ltd. is an asset manager for both institutional and retail customers. It offers an online facility to open managed accounts, and a dynamic hedging service that generates incremental ‘alpha’ and efficiently reduces foreign currency risk. Tere is also a suite of information services, in particular a scale of ‘market quakes’ equivalent to a Richter scale for foreign exchange markets. Olsen Ltd.’s asset management services are non-correlated with the strategies of other managers, so the investor has a high diversification effect and a good return profile compared to the available risk budget.
You are also Chairman of OANDA, which uses innovative computer and financial technology to provide online FX trading and currency information services. What types of client have traditionally been attracted to the firm and how have you been extending your customer base?
Traditionally, OANDA was purely a retail platform. Yet it was our intention from the beginning to transform the company into a market maker that serves all participants in the foreign exchange market, be they private individuals, companies, or mid- to low-tier banks. We introduced our fxTrade trading platform in 2001 and over the years, most of our customers have discovered us through word of mouth. We did not engage in traditional marketing and sales practices until last year because a principle we firmly believe is that success only happens when your products are so good, they become viral. So our efforts are devoted to making the products truly exceptional—building on the strong foundation we have established as we actively market OANDA moving forward.
A few years ago you famously co-published The Forex Trader’s Bill of Rights, which talks about traders having access to a free, open, and stable forex market operating with technological efficiency. Do you still subscribe to all of the concepts of that paradigm and if so, how close are we to achieving it?
To be perfectly frank, I am even more determined to make these ideas a reality today. Te economic crisis is proof of what can happen when the foundation of the economic system is not rock solid. For example, in Te Forex Trader’s Bill of Rights we mention the need for paying interest by the second. If the world’s financial industry regulators would realise that second-by- second interest rate payments are essential for market stability, we would be a lot closer to truly beneficial reform of the financial system.
In what ways do you believe the technology provided by platforms like OANDA’s fxTrade helps to ensure liquidity within the FX market?
For markets to be liquid, market makers need to provide consistent pricing. OANDA’s pricing engine is robust and consistent and has the best prices in the industry, which makes a significant contribution to overall market liquidity.
Our ability to provide 24/7 pricing—including weekends—further contributes to liquidity, not just during regular business hours, but also on holidays. We need ongoing pricing just as we need basic utility services, such as electricity and water supply, which are supplied around the clock,
In addition to offering prices on a 24/7 basis, we create a level playing field for traders by offering the same price to all customers regardless of transaction size.
102 | april 2011 e-FOREX
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