OANDA Launches Online FX trading system for small investors
By John Walsh
London, March 28 (BridgeNews) - OANDA, a subsidiary of Swiss e-finance technology and services company Olsen Group, said its new online foreign exchange trading portal aimed at the small investor went live Wednesday. The portal is the first online trading system offering continuous interest rate differential payments, OANDA said.
Richard Olsen, chief executive officer of the Zurich-based company, said OANDA did not use third party bank prices, but instead supplied the bid/offer prices itself. Olsen said it used its predictive modeling technology to forecast what the supply and demand would be among its customers and hedged its foreign exchange reserves requirements accordingly. Although the system could cater for orders of any size, Olsen said it was looking primarily at the 1 U.S. dollar to 1 million U.S. dollar market.
Olsen added that the small retail investor, the traditional portfolio manager who needs to hedge stock/bond positions and the small corporate treasurer were the type of clients it wanted to attract.He said OANDA was not in competition with other FX trading portals such as FX-All, Atriax or Currenex as these were aimed at the big-volume inter-bank market.
Brokerage houses are offering a similar type of service, but OANDA could also be rolled out as a "white label" product, Olsen said. This is where a brokerage house can use OANDA's technology and offer it as its own service by paying a yearly license fee.
Unlike other foreign exchange portals, Olsen said OANDA was the first to provide interest rate differentials on a continuous basis. "If you hold a particular currency and the central bank hikes the interest rate, then our competitors will only change the interest rate overnight, we will do it as it happens," he said.
OANDA is offering prices on all the major exchange rates initially and plans to expand its range, but Olsen declined to put a timeframe on when this would happen. He said the service had no plans to extend its service to other asset classes. Olsen said 2,500 customers had signed up for the simulation phase, and forecast most of these would eventually use the live service. However, only about 30 users have signed up so far Wednesday, he said.