The internet trading service offers live FX trading for nine major currency pairs with a $1 minimum trade with no commission or charges. Clients pay via a spread of 0.02%. Richard Olsen, chairman of Zurich-based parent Olsen Group, told FX Week the launch would open the market to retail investors, who have previously been prevented from trading FX by poor retail spreads and high costs of entry.
Olsen said the service makes trading currencies a better proposition for retail investors than trading equities, which may incur a 0.5% spread on major stock exchanges. Trading is offered with a margin of 5%, giving investors access to highly leveraged trading that might normally be beyond their reach, said Olsen.
The 0.02% spread means the firm will make $20 per $100,000 traded. Olsen expects a large volume of small-value trades initially as people get used to trading FX. He thinks Asian investors will be particularity interested in the service, because the region has a culture of daily currency trading. Meanwhile, small banks and broker-ages without an FX product of their own may buy a branded white-label version of the service over the Web to offer their customers online trading through their own systems.
Users can familiarise themselves with FX trading on OANDA's trading game, which has been live since January.
Olsen said as the service is only trading spot FX, and not forwards or futures, it does not need to be externally regulated. But he says OANDA will behave "as if we are regulated", and investors will have some protection from the risk management tools on offer.
Otto Amberg, secretary of ACI Suisse in Zurich said in Switzerland, unlike the US, investors can trade as they wish, and that it is the firm's responsibility to ensure customers can afford to trade, not the regulators.
