Finance Magnates spoke with Louis Cooper, Managing Director of OANDA Australia, for his perspective on the industry and company's performance in his first year leading the broker. His interview can be read in full below:
1. In your first year in the new position in Australia, have there been any surprises or previously unforeseen differences from your other roles in the industry?
Indeed, there are a couple interesting points about my first year here. First of all, the Swiss National Bank (SNB) event, and more specifically the abandonment of its currency peg with the euro, definitely changed the landscape quite a bit globally, but also in Australia. OANDA has certainly seen a difference in its business since the event, albeit in a number of positive ways.
First of all traders are much more aware of counterparty risk following the SNB event. Truly, the event was a Black Swan
Black Swan
A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in
A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in
Read this Term and market participants are starting to ask a lot more questions about what they expect from a trading relationship.
Clients are now asking how well capitalized the provider is and how well their funds are protected, i.e. how much are client funds segregated from the business, etc. Moreover, clients are also asking how transparent the pricing is, if the trades are rejected, will they be requoted etc., during the onboarding process.
OANDA is well capitalized, we do not reject trades and fully segregate client funds from our own. As a result, we are enjoying some strong growth relative to some of our competitors in Australia. Overall, people are much more cautious and given recent events we certainly can’t blame retail clients for the heightened awareness. It’s a good thing.
I’ve been talking to our clients since we launched and one of the aspects most people appreciate is the speed of our execution. However, we can always push harder and improve our execution speed - which is market leading – and we fully intend to do so.
OANDA was a late entrant to the FX market here in Australia, but we had enough unique selling points to do well in this market. I would never have accepted the role at OANDA if I didn't think they had a good opportunity to make it in this market, and early signs are positive. As of the end of 2014 we’ve doubled our client base and almost quadrupled our client trading volumes - after only 8 months in market.
2. Has OANDA’s leverage been a strong selling point amongst many Australian clients since SNB?
Leverage is part of it and most of our clients didn't go into negative territory because they didn’t have too much exposure (those that did were rebated back to zero). We are also seeing clients asking for lower leverage, not more, post SNB, which is a sign some clients are adopting a lower risk profile to their FX trading.
We did suffer some loses during SNB, but they were limited because we managed our position and margin in real-time. Some traditional systems do not margin in real time,- that’s fine in normal market conditions but during huge volatility, i.e. the SNB event, this simply doesn't work.
During the SNB event we were able to manage our risk effectively and offload trades in the market before Liquidity
Liquidity
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
Read this Term dried out. We did some analysis post SNB, and if we had executed our trades just 15 seconds later our losses would have been far greater. The way you handle your risk during these stressful times is extremely important, not only to protect your clients, but also your own counterparty risk as a broker.
If you have a ‘middleman’ between a client trade and liquidity provider this doesn't work during a crisis. This event just simply took the market by surprise and we likely won’t see it again for a while, but simply we do not know 100%. That's the excitement of markets, but that's also why you need a provider you can trust.
3. Has mobile trading caught on amongst OANDA clients in Australia? What has been the reaction to the new API?
Yes, another interesting thing I’ve seen here at OANDA in Australia is the increased use of mobile trading, including tablets – it’s easier to execute trades and do analytics while on the move. In any given month in Australia, 40% of trades are executed by clients via mobile devices and that's a strong growth element.
This is the first time I’ve offered an API product as head of a business and I’m surprised how strong the interest has been – that's been a big success story. We have developed a new API and integrated it into our FXLabs tools and we are finding people wanting to offer our tools within their FX portals, as well as clients using the API to integrate their automated trading systems into our trade engine. We have a REST API which is free to use and extremely easy to connect with.
We’ve also had significant interest from IBs who want to use the API to integrate trade execution capability within their own trade signal and education platforms.
4. Despite being in Australia, have you noticed an uptick in clients after the Swiss National Bank (SNB) decision earlier this year?
Globally, OANDA saw a 7% increase in new clients during Q1, 2015. We also captured a lot of new accounts switching from current providers and we lean on our reputation at OANDA. We have benefited and are proud to have done so. 2015 has definitely been a very interesting year thus far.
5. How are clients’ needs or trading patterns different in Australia than in other areas you have experience in, i.e. New Zealand, etc.?
Australian traders at OANDA use a lot more risk management in their trades. We did a recent study of those that trade at our maximum leverage levels and 75% of trades included risk management,, compared to only 5% globally at OANDA. That's a significant use of risk management orders, I think Australian traders are managing their risk much more effectively compared to some global clients and that's great to see.
We see a lot more cross over between FX and CFD trading. When we started operations in Australia we were an FX only business in terms of client volume. We now have seen a significant interest in CFD trading here and a lot of people trading multiple asset classes. That's a much higher percentage than some of our global divisions.
There is a significant retail trading market in Australia, and traders here are very well versed in trading direct shares, options, futures etc. Moreover, traders seem more agnostic to the instrument they trade, or rather they are looking at technical trends across multiple asset classes. It’s been an interesting discovery, but not one I’m totally surprised about. OANDA has a very diverse client base here in Australia – when it comes to derivatives, the Australian client base is very sophisticated.
6. What does the future hold for OANDA in Australia?
We are attracting and winning clients away from other providers and I think that will continue to happen moving forward. Another thing we will be focusing on is the IB space. We’ve seen some interesting growth in this area and will continue to optimize our offering in 2015/16. We have not traditionally been involved in the IB base but we are developing a good IB proposition and we are seeing the results of that locally, where we are seeing strong client and volume growth month-on-month.
Overall, we continue to develop our trading platforms with some exciting and innovative pieces coming soon, which I think will be game changing. We continue to optimize our API and offer diversification through our API. With markets becoming so much more tech focused and clients wanting to plug their own signals and trading systems into our trading engine, the API has become such an important part of our offering.
Finally, we want to grow our client base and we had a strong Q1 2015. We are looking forward to Q2 and are trying to build strong retail growth in all markets, with Australia being no exception. We’ve already had some solid success in Australia and have recently been awarded here by Investment Trends for our outstanding customer service. I ultimately don't think these things go unnoticed and we want to build our reputation as the best provider for FX and CFDs.
Finance Magnates spoke with Louis Cooper, Managing Director of OANDA Australia, for his perspective on the industry and company's performance in his first year leading the broker. His interview can be read in full below:
1. In your first year in the new position in Australia, have there been any surprises or previously unforeseen differences from your other roles in the industry?
Indeed, there are a couple interesting points about my first year here. First of all, the Swiss National Bank (SNB) event, and more specifically the abandonment of its currency peg with the euro, definitely changed the landscape quite a bit globally, but also in Australia. OANDA has certainly seen a difference in its business since the event, albeit in a number of positive ways.
First of all traders are much more aware of counterparty risk following the SNB event. Truly, the event was a Black Swan
Black Swan
A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in
A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in
Read this Term and market participants are starting to ask a lot more questions about what they expect from a trading relationship.
Clients are now asking how well capitalized the provider is and how well their funds are protected, i.e. how much are client funds segregated from the business, etc. Moreover, clients are also asking how transparent the pricing is, if the trades are rejected, will they be requoted etc., during the onboarding process.
OANDA is well capitalized, we do not reject trades and fully segregate client funds from our own. As a result, we are enjoying some strong growth relative to some of our competitors in Australia. Overall, people are much more cautious and given recent events we certainly can’t blame retail clients for the heightened awareness. It’s a good thing.
I’ve been talking to our clients since we launched and one of the aspects most people appreciate is the speed of our execution. However, we can always push harder and improve our execution speed - which is market leading – and we fully intend to do so.
OANDA was a late entrant to the FX market here in Australia, but we had enough unique selling points to do well in this market. I would never have accepted the role at OANDA if I didn't think they had a good opportunity to make it in this market, and early signs are positive. As of the end of 2014 we’ve doubled our client base and almost quadrupled our client trading volumes - after only 8 months in market.
2. Has OANDA’s leverage been a strong selling point amongst many Australian clients since SNB?
Leverage is part of it and most of our clients didn't go into negative territory because they didn’t have too much exposure (those that did were rebated back to zero). We are also seeing clients asking for lower leverage, not more, post SNB, which is a sign some clients are adopting a lower risk profile to their FX trading.
We did suffer some loses during SNB, but they were limited because we managed our position and margin in real-time. Some traditional systems do not margin in real time,- that’s fine in normal market conditions but during huge volatility, i.e. the SNB event, this simply doesn't work.
During the SNB event we were able to manage our risk effectively and offload trades in the market before Liquidity
Liquidity
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
Read this Term dried out. We did some analysis post SNB, and if we had executed our trades just 15 seconds later our losses would have been far greater. The way you handle your risk during these stressful times is extremely important, not only to protect your clients, but also your own counterparty risk as a broker.
If you have a ‘middleman’ between a client trade and liquidity provider this doesn't work during a crisis. This event just simply took the market by surprise and we likely won’t see it again for a while, but simply we do not know 100%. That's the excitement of markets, but that's also why you need a provider you can trust.
3. Has mobile trading caught on amongst OANDA clients in Australia? What has been the reaction to the new API?
Yes, another interesting thing I’ve seen here at OANDA in Australia is the increased use of mobile trading, including tablets – it’s easier to execute trades and do analytics while on the move. In any given month in Australia, 40% of trades are executed by clients via mobile devices and that's a strong growth element.
This is the first time I’ve offered an API product as head of a business and I’m surprised how strong the interest has been – that's been a big success story. We have developed a new API and integrated it into our FXLabs tools and we are finding people wanting to offer our tools within their FX portals, as well as clients using the API to integrate their automated trading systems into our trade engine. We have a REST API which is free to use and extremely easy to connect with.
We’ve also had significant interest from IBs who want to use the API to integrate trade execution capability within their own trade signal and education platforms.
4. Despite being in Australia, have you noticed an uptick in clients after the Swiss National Bank (SNB) decision earlier this year?
Globally, OANDA saw a 7% increase in new clients during Q1, 2015. We also captured a lot of new accounts switching from current providers and we lean on our reputation at OANDA. We have benefited and are proud to have done so. 2015 has definitely been a very interesting year thus far.
5. How are clients’ needs or trading patterns different in Australia than in other areas you have experience in, i.e. New Zealand, etc.?
Australian traders at OANDA use a lot more risk management in their trades. We did a recent study of those that trade at our maximum leverage levels and 75% of trades included risk management,, compared to only 5% globally at OANDA. That's a significant use of risk management orders, I think Australian traders are managing their risk much more effectively compared to some global clients and that's great to see.
We see a lot more cross over between FX and CFD trading. When we started operations in Australia we were an FX only business in terms of client volume. We now have seen a significant interest in CFD trading here and a lot of people trading multiple asset classes. That's a much higher percentage than some of our global divisions.
There is a significant retail trading market in Australia, and traders here are very well versed in trading direct shares, options, futures etc. Moreover, traders seem more agnostic to the instrument they trade, or rather they are looking at technical trends across multiple asset classes. It’s been an interesting discovery, but not one I’m totally surprised about. OANDA has a very diverse client base here in Australia – when it comes to derivatives, the Australian client base is very sophisticated.
6. What does the future hold for OANDA in Australia?
We are attracting and winning clients away from other providers and I think that will continue to happen moving forward. Another thing we will be focusing on is the IB space. We’ve seen some interesting growth in this area and will continue to optimize our offering in 2015/16. We have not traditionally been involved in the IB base but we are developing a good IB proposition and we are seeing the results of that locally, where we are seeing strong client and volume growth month-on-month.
Overall, we continue to develop our trading platforms with some exciting and innovative pieces coming soon, which I think will be game changing. We continue to optimize our API and offer diversification through our API. With markets becoming so much more tech focused and clients wanting to plug their own signals and trading systems into our trading engine, the API has become such an important part of our offering.
Finally, we want to grow our client base and we had a strong Q1 2015. We are looking forward to Q2 and are trying to build strong retail growth in all markets, with Australia being no exception. We’ve already had some solid success in Australia and have recently been awarded here by Investment Trends for our outstanding customer service. I ultimately don't think these things go unnoticed and we want to build our reputation as the best provider for FX and CFDs.
