OANDA - Safety of Clients' Funds

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TheBramble

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Appear not to have any basis to cover clients funds should they go into liquidation/bankruptcy.

Has this always been the case?
 
So, how much is allocated to client account protection?

I wasn't querying the financial viability of the company, just that if it did belly up for whatever reason, there doesn't appear to be any facility to repatriate clients' funds.
 
I'm not up on the specific details, though I probably should be, but aren't client funds segregated?
 
:LOL:

Well, if there wasn't anything to be worried about before, there may be now...

Last night after logging in and getting my main account screen, I clicked on the 'Safety of Funds' link in the "Your Funds" section and it took me to the text that informs there is no cover for clients' funds in case of OANDA’s bankruptcy/liquidation.

Although the link is still showing at this moment

http://fxtrade.oanda.com/fxtrade/funds/fund_safety.shtml

when you click it you get taken out and back to the "Your FX Trading Account" page.

When I discovered the protection of funds issue last night, I closed my one open position right there and then and organised almost total fund withdrawal (I always leave a nominal amount in all accounts I no longer plan on using as formally closing them causes more hassle than it’s worth generally) so am not now overly concerned on a personal basis financially. But I am concerned in principle with this latest development.

Anyone from OANDA on these boards able to officially comment?
 
I just did some reading on the Oanda boards. This topic has definitely come up there and the long and short of it is no insurance. If they go under clients become general creditors. A lot of folks there talked about that as a reason for not keeping much money with them. The cry was going out for Oanda to get an insurance policy as some other brokers have done.

That all said, I read that they've just received something like $100mln in invested funds from a group with some decent names in it. So from a business perspective you have to think the odds of a bankrupcy are slim to nil.
 
Rhody Trader said:
That all said, I read that they've just received something like $100mln in invested funds from a group with some decent names in it. So from a business perspective you have to think the odds of a bankrupcy are slim to nil.
Click to expand...
Slim, but not nil.

I agree the likelihood of disaster would appear small, but why take a chance?

With IB you’re covered (although I’m getting twitchy as we approach that $30M max cover level…) and looking around elsewhere, cover for clients’ funds seems to be the order of day, quite understandably.

I went with OANDA because the business ethic of their management team impressed and they had an attractive and very competitive trading model. Not so keen on the platform, but hey ho.

What concerns me is that I was pretty sure when I originally signed up they had some degree of cover, enough for me to go ahead with them. I wouldn’t have done so without, but there’s a slim chance I am imagining that. The other aspect which now concerns me more was the pulling of that section of their web after I posted on here. Possibly a coincidence and I haven't checked again this morning, but that’s not very comforting and a strange action for them to take.
 
"and they had an attractive and very competitive trading model."...what's her name and is she game ?

Seriously, no cover no trading money.Simple. Others have ,they should compete on those terms as well as commissions etc.
 
When I googled: protection site:fxtrade.oanda.com

I get a reference to a page:
http://fxtrade.oanda.com/whyfxtrade/ and when I pull up the cached version I still cant see protection. So I looked at the source and in the extra material is:

Code: 
"Funds deposited by clients are held in accounts maintained at highly reputable banks, such as JPMorgan Chase, Citibank, UBS, Deutsche Bank, Royal Bank of Canada, etc. (Note: funds are not insured and do not receive from bankruptcy)</li>"

Got it. When you look under 4, financial reliability, you find it.


Regarding the new large, impressive, investors ... the question to ask is who gets his money first in the case of bankruptcy (and its probably them)?
 
nine said:
Regarding the new large, impressive, investors ... the question to ask is who gets his money first in the case of bankruptcy (and its probably them)?
Click to expand...

Not unless they are lenders rather than investors. Investors are not creditors. They are last in the food change, below even general creditors (read account holders).
 
i think there's enough risk in the market without adding to it in the shape of your broker
 
TheBramble,

OANDA's policies in regards to funds have not changed in the past number of years. Like most FCMs in the US there is no insurance for your margin account. The page you were referring was not removed because you posted here, it is in the process of being re-written as we are planning on launching a new website in the near future. Safety of funds is something that OANDA takes seriously and we have been profitable since almost the first we launched and with our new investment of capital we will have close to 3x more excessive capital compared to other FCMs in the US.

Regards,
AndresS
OANDA Corp
 
This is quite a common topic on the Oanda boards, the only solace in regards to this in my opinion is that they've been around a long time and certainly seem to be in good shape from what I can gather. I don't know what the future holds now they've had a massive injection of cash but we'll see. If you have a big account I can see the problem - you only have to look at what happened to RefCo <gah> - for me its not a massive issue however as I only have a baby account with them.
 
AndresS, thanks for your response.

I obviously did some shoddy research when signing up as I wouldn’t have done so and committed funds to OANDA knowingly without cover. I hold funds with two other US based brokerages and they both have an appropriate level of cover and that’s how I like it.

It was obviously a coincidence then that that part of the web regarding lack of cover for client funds was taken off at that specific time it came under discussion here, which is unfortunate as it sent the wrong message out. Still, these things happen and always at the wrong time.

My opinion of your company is as stated above and very positive, and I am sure your current level of solvency will give few any sleepless nights, but for the reasons also stated above, in eliminating risk, however small, at every opportunity, I have less sleepless nights than most.
 
Thanks for bringing up this very important topic, Bramble.

It's certainly also news for me that Oanda have no protection for client funds, which doesn't really say much for my due diligence efforts.

Also having a futures account I made the mistake of simply assuming that the leading forex broker would offer the same fail proof protection as all futures brokers do.

I'm not connected with the firm behind the following link, found them via a google search, but they do a good job of explaining the disgraceful handling of forex brokers towards their clients funds:

http://www.fxfutures.com/content/spot/index.php?show=1

I've been with Oanda for several years and have always been very satisfied in all regards, and up to now had planned on adding quite a bit more funds to my account there, but won't be doing that now unless Oanda do what every good broker provides, which is guarantee the safety of their customers funds.

AndresS, saying that "Safety of funds is something that OANDA takes seriously" only to clarify that with "Like most FCMs in the US there is no insurance for your margin account" is really in no way compatible with your desire to be an industry leader.

The single most important issue for a brokers client is safety of funds !

Refco has clearly shown that size is no protection against bad things happening.

The futures clients of Refco emerged unscathed from the bankruptcy, it's their spot forex customers that were left holding the bag, just like Oandas FX clients would lose everything in the event of a bankruptcy.

Surely Oanda can do better than that ?
 
Last edited:
Just did some more googling and came up with this from one of the two founders of Oanda, Michael Stumm:

"Finally, with respect to safety of funds, all our client funds are maintained in a segregated escrow account specifically for this purpose. Moreover, if you are a U.S. person (i.e. have a SS number) then we can set you up with a personal segregated account, but the condition is that you maintain $50,000 minimum deposit."
http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=17;t=000137

Now then, those terms are fair enough I suppose RE minimum deposit, but why on earth can't they offer that to non US persons too ?!?
 
Segregated having a specific legal meaning? Segregated accounts just mean they keep your money separate from their own. I'm not sure it provides and implicit security.

Perhaps AndreS can confirm?
 
TheBramble said:
Segregated having a specific legal meaning?
Click to expand...
In the UK this means if the company goes belly up then the creditors of that company have no legal charge over a Client segregated Account. ie it's ring fenced.
Pretty sure that FSA (or whatever it is these days) regulated brokers are required to maintain this sort of structure for client monies.
(Note that deposits at a building society are quite different!)
 
In which case, providing it has the same interpretation in the US and providing it is still in force, OANDA appear to offer some US based clients protection. Not clear if it covers all their clients funds (those who maintain the minimum) or just the minimum.

We really could do with a company voice here as with the coincidental pulling of this part of the web content last week and the apparently mamoth task of uncovering what is and what isn't covered, transparency would seem to be the main requirement here.

Are there any other OANDA clients on here who can shed further light on this subject?
 
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