The US Forex brokerage market has been through a fair amount of consolidation over the last few years.
However, new forex brokerage licenses are being granted to overseas brokers wanting to offer Forex trading services to non-US residents.
So, we talk Vatsa Narasimha, CEO of OANDA, a US Forex broker with a global client base, established for over two decades about the overall forex market and what makes them stand out.
Thanks for taking the time to talk to us. To kick things off, who are you, what do you do and who do you do it for?
My name is Vatsa Narasimha and I am the President and Chief Executive Officer of OANDA, a global leader in online multi-asset trading services and currency data and analytics. In my role, I am responsible for driving top-line revenue growth for the company around the world.
What does OANDA stand for? Both in terms of the name and what you offer clients.
For most people, the name OANDA has become synonymous with forex, trust, fairness and innovation over the years.
When it comes to Forex trading. What does OANDA do really well that sets you apart from other forex brokers?
I believe OANDA remains competitive in the market for three reasons:
Firstly, in today’s market, clients are increasingly looking for a broker they can trust. Regulated by six authorities around the world, OANDA was built on a foundation of transparency and integrity. Over the course of our 22-year history, we’ve earned a reputation for putting client interests first, operating within a value-based framework that has repeatedly demonstrated our commitment to fairness and integrity.
Secondly, traders today expect complete transparency, not only when it comes to pricing and commission structures but also in terms of execution and risk management. OANDA’s entire system architecture was built to offer greater transparency and protection for client capital. Fully automated with no manual intervention, once our clients decide to trade, they can do so confidently, knowing we have no algorithmic software designed to alter their trades.
And thirdly, we continually demonstrate our ongoing commitment to supporting clients over the course of their trading, whether that’s through our award-winning education program, up-to-the-minute market commentary or state-of-the-art trading tools. We are constantly launching new advanced charting applications, technical analysis, open order books, and economic overlays that provide clients with greater clarity over the markets, often in real time, in order to help them succeed. We arm our clients with the necessary insights to help them identify trading opportunities while protecting their portfolio from risk.
There are very few forex brokers in the US. What do you think puts US brokers off private client forex trading?
I believe there are two key reasons why there are so few forex brokers in the US. Firstly, the US is a heavily regulated market with high minimum capital requirements. Brokers that want to onboard clients must be regulated by the National Futures Association (NFA), and a licence comes with a USD20 million minimum capital requirement. This requirement actively prevents smaller brokerages from entering the market.
And secondly, historically the NFA enforced lower leverage rates than many other markets, establishing a maximum 50:1 for major pairs and 20:1 for minors. As such, this made it harder for brokers to turn a profit on trading volumes, so many opted out of the US in order to focus on geographies with less stringent margin requirements.
OANDA is one of the very few Forex brokers that also offers deliverable foreign exchange as well as trading. Do you see much of a cross over between products or are they very much separate parts of the business?
While there is limited cross over between our trading business and our currency data and analytics business in terms of client base, in reality the success of products such as the OANDA Exchange Rates API rely heavily on the deep-seated expertise we have gained from the trading business over the course of our 22 year history.
OANDA Rates now provides access to daily averages, spot and forward rates, central bank exchange rates and tick-level data for 38,000+ currency pairs, over 200 currencies, commodities, and precious metals, as well as exchange rates sourced from 25 central banks and historical currency rates that date back to 1990. This is only possible because we leverage our access to a full range of interbank liquidity, proprietary trading technology and pricing algorithms to calculate accurate exchange rates based on actual forex transactions, giving users a true reflection of the forex market. As such, these two products are inextricably linked.
And finally, what would you say were your top three under-utilised online resources for forex traders?
Traders who have access to real-time information are better placed to make informed decisions when it comes to their strategy, however for many years this remained the exclusive domain of institutional traders. Now, thanks to technology, a host of advanced charting applications, market indicators, sentiment analysis tools and economic overlays exist, providing clients with greater clarity over the markets often in real time, creating a competitive edge. As such, I would say the following resources should be in every trader’s playbook.
Chasing Returns – Drawing on behavioural science, Chasing Returns provides an in-depth view into individual trading habits, enabling traders to take immediate advantage of personal analytics to better understand their behavioural biases such as whether they are more successful on a certain day or with a certain product. We offer this to all clients through the OANDA Trading Performance Management portal.
Open Order Indicators – Once the exclusive domain of institutional traders and dealing desks, open order indicators enable retail traders to capture market sentiment, identify large order clusters and key levels, view existing open orders and positions, and identify reversals and trade against the market, all while protecting their portfolio from risk. We offer a range of indicators for both our proprietary trading platform and MT4.
QuantConnect –QuantConnect’s open-source, cloud-based algorithmic trading engine allows traders to code, back test and deploy their own automated trading strategies direct from their browser. Our clients can access this through the OANDA Algo Lab.