Deplorable: OANDA CEO takes very unpleasant cheap shot at FXCM, misuses situation for gloating PR message

What could be considered to be the appropriate course of corporate action by one of America’s three domestic market retail FX giants in the light of the downfall of one of their peers this week?

The correct and proper commercial conduct would be to maintain dignity, carry on as normal and show some respect, even if the ruling by the Commodity Futures Trading Commission (CFTC) against FXCM’s US entity along with two of its senior directors, one of which is the company’s CEO Drew Niv, was extremely damning in that the US regulator concluded that the company had an undisclosed interest in an external market maker that was using algorithmic methods to actively trade against FXCM’s clients and then pay FXCM rebates, when all the while, the firm maintained in public filings and marketing material that it was executing trades on an agency basis.

This industry-changing occurrence has resulted in FXCM having been banned from operating in the United States, and its two senior directors Drew Niv and William Ahdout being banned alongside the company over which they preside, decimating one of the world’s most widely recognized and respected retail FX firms and creating a vast trust void concerning its global business model.

Under these extremely shocking circumstances, there are so many factors yet to consider, and the banning of the company and its two senior directors from operating in the US is just the beginning as class action law suits from investor protection lawyers amass, ready to attempt to recover shareholder losses, and as Leucadia directors replace Mssrs Niv and Ahdout as directors of FastMatch, and as the entire industry watches an evergreen stalwart systematically dismantle itself.

It is FinanceFeeds’ view given the gravity of this situation that discretion is the better part of valor, however, in an almost unbelievable attempt to gain glory on the back of its rival’s demise, OANDA Corporation’s CEO Vatsa Narasimha, who has only led the company for one month, having taken over from Ed Eger in January after his promotion following three years of strategic operational work in growing the company’s presence in new sectors and regions, streamlining and automating the operations of the firm and building a data-driven customer focused team.

In an abject display of vulgarity, Mr. Narasimha has made a public statement today, which was distributed to FinanceFeeds via a public relations company operating on behalf of OANDA Corporation, championing the CFTC’s decision on FXCM’s fate and blowing OANDA Corporation’s corporate trumpet in an unpalatable fashion.

Entitled “OANDA supports CFTC’s move to protect the interests of traders, the diatribe was preceded by a message from the public relations firm stating “By now, I am sure you have seen that the CFTC has levied a huge fine against FXCM for engaging in false and misleading solicitations forcing its withdrawal from the US market.”

“OANDA’s new CEO, Vatsa Narasimha, supports the CFTC’s move to protect the interests of traders. He has some strong views on how the retail trading industry needs to shape up to become more transparent, fair and supportive of investors and traders. He believes a broker should be held accountable for making questionable statements or falsely disclosing their interests” continued the public relations officer.

We were then asked to read further to see the official statement from OANDA, and thanked accordingly.

The statement from Mr. Narasimha, was then provided, saying “At our very core, OANDA has always been an extremely client-focused organisation, dedicated to creating a fair and transparent arena in which retail clients can trade, safe in the knowledge that we have their best interests at heart. That’s why we believe the affirmative stance taken by the US Commodity Futures Trading Commission (CFTC) against the misrepresentation of interests to retail clients trading the global currency markets is an extremely positive move. Given our long-standing commitment to integrity, we believe the retail trading industry as a whole will benefit from a more transparent approach where brokers are held accountable for making questionable statements or falsely disclosing their interests.”

Continuing to use this set of circumstances to provide baseless PR puff, Mr. Narasimha’s comment continued “Customers should trade with a broker they trust. Throughout our 21-year history, OANDA has earned a reputation for always putting our clients’ interests first. Closely regulated by six authorities around the world, we work hard to ensure our clients succeed by offering transparent spread-only pricing with no hidden commission, no requotes and no rejections. We’ve also remained true to our legacy of integrity even during unprecedented market events such as the SNB crisis. As an organisation, we are committed to helping our clients succeed, protecting their interests wherever possible.”

The comment then continued by detailing what has been described as OANDA’s Commitment, as follows

“Widely respected in the trading industry, OANDA combines cutting-edge trading technology and institutional-grade execution across a wide range of asset classes, enabling clients to trade global stock indices, currencies, commodities, precious metals and treasuries on the world’s best retail FX platform. The firm boasts a state-of-the-art V20 trading engine that execute trades in less than two milliseconds, significantly reducing the chance of slippage in one of the world’s fastest-paced markets.” – No facts or figures? Of course not. No allusion to where trades are being cleared or if they are being internalized? Of course not.

Finally, in what can only be described as a deplorable display of gloating, the statement from Mr. Narasimha said “OANDA applauds the CFTC’s recent action and looks forward to working together towards the overarching goal of achieving a secure experience for traders.By now, I am sure you have seen that the CFTC has levied a huge fine against FXCM for engaging in false and misleading solicitations forcing its withdrawal from the US market.”

During the course of last week, 150 staff, through no fault of their own, lost their jobs. 150 staff that were skilled professionals, dedicated to their careers, who had learned their trade via the good work ethic that has contributed toward giving FXCM its globally recognized good name for efficiency until its execution practice misrepresentation was unearthed.

Whilst so many people now need to find re-employment, Mr. Narasimha decides to do nothing more than rub their noses in a non-descript attempt at drawing attention to OANDA Corporation on the back of their misfortune.

FinanceFeeds approached OANDA Corporation and its public relations agency with regard to this, explaining our position in no uncertain terms on the matter.

The public relations agency representing OANDA Corporation noted that OANDA still believes in its CEO’s initial statement, however as a result of FinanceFeeds reaction to OANDA’s actions, Natasha Lala, OANDA Corporation’s Managing Director for Solutions for Business, responded to us and expanded on it.

“The retail trading community, including OANDA clients, look to us for reassurance and to understand the facts during high profile events, particularly when the alleged actions of one company cast a dark shadow on our industry” Ms Lala explained to FinanceFeeds.

She continued “OANDA played an important role in the creation of the electronic trading market and we will continue to defend it. We take seriously our responsibility to support traders at times when their confidence may be shaken.”

“OANDA stands side-by-side with many of our competitors in support of regulatory scrutiny and the rooting out of misconduct, even when that scrutiny is cast upon a company in our peer group” she said.

“We will continue to herald the actions of regulators and let traders know that these actions are for their protection and education” concluded Ms Lala.

Whilst Mr. Niv and Mr Ahdout now find themselves at the end of the long arm of the regulator, we all know full well that the regulators could decide to have a go at any retail OTC company in America, such is the regulatory distaste for OTC derivaties in North America at the moment, hence those in glass houses should not throw stones.

In a true meritocracy, where technological advancement, good business ethic, regulatory adherence, quality customer service and prompt payment of commitments speak volumes and ensure longevity of clients, any company wishing to grow its client base in the US should direct its efforts towards those tenets, and not toward attempting to blow its horn whilst deriding a competitor at times of difficulty.

OANDA Corporation has always enjoyed a top quality reputation for its technology-led and detail-orientated ethos, and has always been regarded as a bastion of ethics.

Nobody mocked OANDA Corporation when it made commercial faux pas.

OANDA Corporation’s failed attempt at taking its fxUnity product to a wide audience over four years ago is a case in point. The company is a technological tour de force, yet it brought ruinous R&D costs into the boardroom when it canned the fxUnity proprietary social trading platform a very short time after launch, before then becoming embroiled in the catastrophic purchase of the Currensee social trading network which was wound down and discontinued very soon after its acquisition.

Compare that to the self-directed traders that favor proprietary platforms and are experienced in navigating the markets electronically, and OANDA’s migration of 2,200 Tradestation users onto OANDA’s fxTrade platform last year when IBFX exited the US market demonstrates that the same company could not engage traders on social platforms, but was absolutely able to benefit from the onboarding of astute, self-empowered traders who favor a high quality brokerage environment and proprietary platform.

This did not provoke derision of any kind from its peers, who behaved quite respectably and let the customer and the market choose the way forward.

The companies with the best public image in any sector of any industry, high tech or not, financial or not, are the ones that operate their affairs with quality and dignity, and that means not using the misfortune of a competitor to throw salt in the wounds in order to seek baseless glory, and if it really is the interest of a CEO of a top level North American company to do his bit to clear up the reputation of the OTC industry, the best advice would be to begin by not slinging mud.