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Oanda wants Current Net Worth/Employment Update, WTF?

  • Post #1
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  • First Post: Feb 11, 2012 3:43pm Feb 11, 2012 3:43pm
Maybe someone can help me out here...

I am with Oanda Europe, and this week I sent 1000 bucks to my account to fund it again, after the account has been dormant for quite a while. Now along with a notice that my funds have arrived, I got another email where oanda asks me for my net work / employment update. They state that I transfered more to them in total then my total net worth is - just to be clear, this is no more then 3-4k, and I am pretty sure that I didn't say that my total networth is below that... Maybe it's because I moved from OANDA USA to OANDA Europe...

Anyways. Times for me have changed since then, I am self employed, but I am not working much since I have to take care of my grandma. So here I am, with a small yearly income. I have almost no living costs though so thats ok for me and I have some savings that I wanted to use for trading... but I don't think a bank would have the same point of view and just say "not enough income".

Now what I am wondering about is what happens if I tell the truth - they say they might want proof of my net worth bla bla bla bla...? Will they close my account and say it's to high risk for me? Or not allow me to fund my account more? I am really pissed since I managed to get some savings and wanted to trade again, and now this shit happens. Its supposed to be some FSA rule...

What should I do?
Whats the problem? This is standard procedure. If you can't handle this, you really should not trade at all.
Forex is a losers game.
thanks for your answer, but it does not help me.

You are missing the point here. I am asking what I should to to avoid getting my account closed or to avoid getting a deposit lock or something... Since I don't have experience with this type of question (obviously) I am asking for some help. Nothing wrong with that.

I wonder though, how your magical psychological analysis of my entire character could come up with this totally accurate answer that I may not be able to handle trading... wow. I hope you get my irony. I hope your technical analysis is not as accurate as your psychological one, otherwise you might be in trouble m8.

Please don't come back to this thread unless you have something productive to say.
It's a "know your client" kinda thing.

Here in Canada, we have an IIROC regulation that requires Oanda to do the same and set limits to how much one can deposit in the account.

The idea is to limit the risk of trading losses to people who aren't in the most financially stable position.

Don't worry though, if you're only swinging around $1k with them that should be approved without a problem. . . even a small income and flat net worth should be able to lose a grand (not saying you will, but this is a risk assessment) without hurting themselves significantly.

The idea is to weed out people who are dropping large amounts of money into the forex market with limited experience and no way to replace said deposit if it's lost...

Also, if they set limits in any way that you later want to exceed, just talk to them and explain what your goals are and what you need to achieve them... They'll reassess it then. Besides, any deposit limit they set on your account won't stop you from growing the account through trading, it's only there so you can't deposit more than said amount with them.
FXGears.com
Quoting Jack_Larkin
It's a "know your client" kinda thing.

Here in Canada, we have an IIROC regulation that requires Oanda to do the same and set limits to how much one can deposit in the account.

The idea is to limit the risk of trading losses to people who aren't in the most financially stable position.

Don't worry though, if you're only swinging around $1k with them that should be approved without a problem. . . even a small income and flat net worth should be able to lose a grand (not saying you will, but this is a risk assessment) without hurting themselves...

People forget that brokers are regulated. They aren't casinos. It's their JOB under the rules to make sure that you qualify to trade.
Herbun, it is just info that you need to provide Oanda because they have to comply with the rules set by their regulator. You wont have to provide any proof. If you are clever enough in your answers to them, you wont have any problem keeping your account open.
Quoting fxfeeler
People forget that brokers are regulated. They aren't casinos. It's their JOB under the rules to make sure that you qualify to trade.

I'm sorry, but it's not their "JOB under the rules" to make sure you quality as a trader. Can you please reference any "RULES" as to what your net worth has to be and what your yearly salary has to be to trade?

I'm not knocking you individually... but I think some of these brokers are going way and beyond their bounds to "qualify" good traders.
Quoting Equicurve
I'm sorry, but it's not their "JOB under the rules" to make sure you quality as a trader. Can you please reference any "RULES" as to what your net worth has to be and what your yearly salary has to be to trade?

I'm not knocking you individually... but I think some of these brokers are going way and beyond their bounds to "qualify" good traders.
Actually, under some regulators and in some countries, brokers are legally bound to assess how much risk you can take on as a trader.

IIROC here in Canada has all sorts of requirements. For instance, we have 4 levels of 'ability' to trade equity options and our trading experience, net worth, and income all play into what level we're enabled to trade with.. (example, level 1 means you can buy contracts in a cash account, but can't leverage yourself or even sell a covered contract... level 2 lets you sell covered calls... goes up from there... if you want to sell naked options you basically gotta prove you can afford a disaster in your account and have the experience needed to prevent it from happening.)

For forex and futures, our max deposit is capped based on set rules.


It's really not a big deal, and I'm kinda glad they have it in place. I've never understood why so many new traders demand the ability to lose more of their money at a quicker rate with trading instruments they don't understand. Plus, it really doesn't take much to get limits raised, a few years of experience trading like-markets plus proof you can afford to have risk capital.. not anything different than what traders should have anyway before taking on this kinda risk.
FXGears.com
Quoting Jack_Larkin
For forex and futures, our max deposit is capped based on set rules.
Really? What amount is the max deposit?

Sounds horrible, Canada seems even worse for retail traders than the States.
Quoting CaymanTrader
Really? What amount is the max deposit?

Sounds horrible, Canada seems even worse for retail traders than the States.

I'm afraid you're missing the point. It's not horrible at all for experienced people since their caps are set quite high to accommodate their experience and deep pockets, and it helps newbies not hurt themselves too much financially by keeping their caps low.

As I said in the last two posts of this thread, the cap is set based on a trader's experience, net worth, and income. They'll even do a credit check to make sure you're not downing in debt compared to your listed income. I have no clue what the exact formula is for setting the deposit caps.

The caps never bothered me since, years back, mine was set higher than my intended first deposit, and I traded the account well past that cap anyhow before making withdrawals, so it's never really bothered me or got in my way.

Of course, unlike the NFA/CFTC.. there's no laws saying you can only trade with a Canadian broker here in Canada under IIROC regulation. You are allowed to trade with whoever you'd like, and other brokers aren't required to have a Canadian office to deal to you. So if this kinda things really bugs you, you can always go offshore.

HOWEVER, one of the huge benefits of trading with a Canadian firm (if you are a Canadian citizen,) is that most IIROC members are also CIPF protected. Meaning if the company were to ever go under, CIPF would handle the transitioning of your account to another firm and cover any funds missing up to $1 million CAD.

A great example of this was when MF Global went under, thanks to our regulation and CIPF, not a single Canadian client lost their deposits, and within a week they had new accounts at RBC with their entire balance available to them to trade or withdrawal.

This is why you want strict regulation.
FXGears.com
AFAIK, those numbers won't be checked by the broker, and in case of clients from overseas cannot be checked. Its just a cover-your-ass paper for the compliance-department, so if a client bets the farm and loses, they can't be sued.

Your account will be denied if the numbers you put in are too low. Oanda once even denied a larger deposit, because the amount was disproportional to his income/networth. UK firms have to do it too, if i'm not mistaken.
Quoting Jack_Larkin
This is why you want strict regulation.

Exactly. People don't get it, you hear all of this talk that regulation is bad and just let me do what I want. What they forget is that the regulation is there to PROTECT THEM.
Quoting shrike
AFAIK, those numbers won't be checked by the broker, and in case of clients from overseas cannot be checked. Its just a cover-your-ass paper for the compliance-department, so if a client bets the farm and loses, they can't be sued.

Your account will be denied if the numbers you put in are too low. Oanda once even denied a larger deposit, because the amount was disproportional to his income/networth. UK firms have to do it too, if i'm not mistaken.
What proportion must your FX account deposit be of your income/networth to guarantee acceptance by FSA regulation or by the regulation of any country. In other words, what ratio of deposit to income/networth would satisfy even the most strict regulator? Can anyone answer this?
Anyone has an idea about those ratio's ?
Quoting Cocoflanel
Anyone has an idea about those ratio's ?
I would suggest a net worth of 500k and liquid funds of 100k. Compliance will like that..
"The meek shall inherit the earth.." Yeah right, good luck with that shit..
Let's face it, politics is a dirty game and right now, they're diggin' their big dirty hooks into the Fx market, end result: varied regulations that they are being enforced for "our protection". Yeah, that's a mouthful and a half
On brokers requesting additional information, all brokers can request any information they deem necessary in order to comply with one form of regulation or the other. However, they are also duty bound to inform clients regarding such and any obligation in their part.
But here's the catch, if brokers inform clients regarding additional forms of verification early on, chances are these trades are going to go elsewhere. So they wait and once you cross a threshold or if your account shows any activity deemed to be "suspicious", your account gets temporarily frozen..
Quoting herbun

Its supposed to be some FSA rule...

What should I do?
As far as I'm aware only self-certification is required (ie you certify that the information you give is accurate, no other verification required) so you can say pretty much what you like (keep it reasonable though!). Liquid assets of say 50-100k and net worth of 2/300k should be ample for having ~30k invested in high risk enterprises like retail forex trading.

Going way back the FSA put investors into categories and classifications (sophisticated, intermediate etc) and firms could only offer certain instruments to certain types of customers. As usual with these things the rules were complex and ambiguous to most people who tried reading them!

Oanda's compliance department are just covering their backs and complying with FSA regulations, it's really nothing to worry or get concerned about.
Quoting pipmutt
As far as I'm aware only self-certification is required (ie you certify that the information you give is accurate, no other verification required) so you can say pretty much what you like (keep it reasonable though!). Liquid assets of say 50-100k and net worth of 2/300k should be ample for having ~30k invested in high risk enterprises like retail forex trading.

Going way back the FSA put investors into categories and classifications (sophisticated, intermediate etc) and firms could only offer certain instruments to certain types of customers....
Kinda like American mortgage lending ! HAH.

OANDA Canada actually does credit checks.
lowest draw down possible please.
I am with Oanda in Canada (BC specifically), and I was also required to do this. Personally, I think it's none of their damn business. Other than this they are a good broker, and have not done me wrong. I would recommend them to anyone.
Quoting CaymanTrader
Really? What amount is the max deposit?

Sounds horrible, Canada seems even worse for retail traders than the States.
You are correct. It is worse than in the USA.
One trader from Alberta is being prevented from trading at all. Unless, he can prove that he is an "accredited investor", description of an accredited investor demands more than the "eligible investor".

Eligible Investor (Alberta)
You must be resident of Alberta to qualify as an eligible investor.
Section 1.1 of National Instrument 45-106,Prospectus and Registration Exemptions, defines “eligible investor” as follows:
(a) a person whose
(i) net assets, alone or with a spouse, in the case of an individual, exceed $400,000,
(ii) net income before taxes exceeded $75,000 in each of the two most recent calendar years and who reasonably expects to exceed that income level in the current calendar year, or
(iii) net income before taxes, alone or with a spouse, in the case of an individual, exceeded $125,000 in each of the two most recent calendar years and who reasonably expects to exceed that income level in the current calendar year,

I fear this will flow through the other provinces as well.

IIROC is slowly sticking their nose into overseas brokers with their Memorandums of Understanding. Slowly, these brokers are preventing Canadians from trading with their brokerage. Just as the CFTC has done with their US residents.
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