Oanda's Terms Changes

[Nowler]

Just received yet another email from Oanda requiring action from me. There's some sort of changes to policy...

Anyway, when reading through it I came across something. Some of it I knew, some I didn't (insurance/protection). I am posting this for anyone else new enough to the game, that doesnt really understand the types of brokers and their terms/policies.

Here's something about Oanda:

The nature of the contracts between you and us
Every transaction you enter into using our services is a contract between you and us. We act as the seller when you buy, and the buyer when you sell.

Our products are not traded on an exchange
The contracts you enter into with us are not executed on an exchange. You may not be afforded all of the regulatory and financial protections offered by exchange-traded investments.

Electronic communications
We offer you the ability to deal by electronic means, via our trading platform online. However, no electronic communication is completely reliable or always available. There is a risk that your communications to us via our trading platform may be delayed, not reach their intended destination and may not be secure.
There is a risk that a catastrophic failure of our internal systems could result in the loss of data recording individual account balances. We mitigate this risk by the frequent backup of data, by maintaining backup systems and through contingency plans to minimise the possibility of system failure.

 

[Dowser]

'There is a risk that a catastrophic failure of our internal systems could result in the loss of data recording individual account balances'

This bit is particularly worrying, I'll have to check my broker's T&Cs.

'We mitigate this risk by the frequent backup of data, by maintaining backup systems and through contingency plans to minimise the possibility of system failure.'

Is there anything the customer can do to mitigate this risk? I don't suppose a screenshot of one's account will carry much weight...

 

[Nowler]

'There is a risk that a catastrophic failure of our internal systems could result in the loss of data recording individual account balances'

This bit is particularly worrying, I'll have to check my broker's T&Cs.

VERY worrying!
I have decided that I will only use Oanda for my mini live account. They have far too many conflicts of interest for me to deposit a lot of money with them.



CONFLICTS OF INTEREST

7.1 We are required to act in your best interests when providing our services, but there may be instances where your interests conflict with ours or those of another customer of ours. For example, we or people connected to us (such as our group companies):
(a) may enter into Transactions with you in which we or people connected to us have a material interest;
(b) may execute hedging transactions before or after entering into a Transaction with you to manage our risk in relation to the Transaction, which may impact the price you pay or receive for such Transaction, and we will retain any profits generated by such hedging; and
(c) may enter into arrangements with third parties to or from whom we make or receive payments based on your trading activity.

7.2 Further, you trade against us (and no third parties) and we are responsible for setting the underlying prices. This could give rise to conflicts which we manage through internal controls, including our best execution and hedging policy.

7.3 We are not under any obligation to account to you for any profit, commission or remuneration we receive from such activities.

7.4 We are required under the FCA Rule to take all appropriate steps to identify conflicts of interest between us and people connected to us and our clients, or between one client and another, that arise in the course of providing our investment services. For further information please refer to our Conflict of Interest Policy, which is available on our Website.

7.5 We will not disclose any conflict of interest to you provided we have managed such conflicts
in accordance with our Conflicts of Interest Policy. If we cannot manage the conflict sufficiently, we will notify you of the conflict and the steps we have taken to mitigate the risk arising from such conflict so you can decide how to proceed.

7.6 You consent to us dealing with you despite your awareness of these possible conflicts.

 

[Dowser]

You'll probably find all broker's T&C's are very similar. Basically, they're covering their árse - big time!

 

[Nowler]

In regards to these conflicts of interest... What do they mean by

"[we] may execute hedging transactions before or after entering into a Transaction with you to manage our risk in relation to the Transaction, which may impact the price you pay or receive for such Transaction, and we will retain any profits generated by such hedging"

They have already just said that this is not a real market/exchange...they have said that they decide what prices to offer...so when they "hedge", as in the context mentioned above, doesn't this effectively mean that they will manipulate the market to reduce my profits, aka reduce their losses?

 

[Dowser]

I think this is aimed at the big player's who bet at £100+/pt, they are managing their risk by hedging in the open market and making sure it works in their favour

 

[Nowler]

I think this is aimed at the big player's who bet at £100+/pt, they are managing their risk by hedging in the open market and making sure it works in their favour

That's what I initially thought but then how does it make sense that this would "impact the price you pay or receive for such Transaction"?

 

[Dowser]

The price they get for their hedge may be less favourable (for them) than the price they quoted just before you placed the trade, so they are passing the shizzle on to you

 

[Nowler]

The price they get for their hedge may be less favourable (for them) than the price they quoted just before you placed the trade, so they are passing the shizzle on to you

Oh how nice of them