OANDA halts margin trading on precious metals in the United States

OANDA US has taken the decision to discontinue the offering of precious metal trading on its fxTrade platform, having implemented this change on August 22, 2014, with the broker informing the public of its decision via its forum just a day before deletion of the asset class.

Traders were notified that they should close all of their open positions which relate to the trading of precious metals before the designated date, with the broker doing so on behalf of clients if positions remained open.

OANDA states regulatory considerations contributed toward its decision to discontinue precious metals trading, citing changes in US laws which stipulate that traders located in the United States traders will no longer be able to trade precious metals with margin or leverage, a total contrast to the landscape which currently is evolving outside the United States, whereby institutional and retail electronic trading firms alike are considering the consolidation of FX and precious metals due to their compatibility within a single business unit and trading platform.

Indeed, this rationale is more than robust, however a point of interest is that OANDA retained the option to trade leveraged precious metals for three years subsequent to Forex.com’s deletion of the asset class from its product range. In June 2011, Forex.com addressed its US clients informing them that due to legislative changes related to the Dodd-Frank Act it would have to stop offering margin trading with precious metals. Forex.com’s clients were instructed at the time to close all of their positions with Gold and Silver not later than July 15, 2011. Apparently OANDA took its time to consider such measures.

The clients of OANDA Corporation who are not US residents and who would like to continue to trade precious metals are advised to open accounts with some of the subsidiaries of the broker. For instance, OANDA Canada offers trading with 21 pairs with XAU an XAG on fxTrade. With OANDA UK, Asia Pacific and Australia, the list is even bigger, as Platinum and Palladium are featured.

US residents which are clients of OANDA Corporation are restricted solely to FX trading via the fxTrade platform, as US laws also prohibit the trading of CFDs.

OANDA will now have to focus its efforts regarding metals trading on overseas businesses, something that companies like Forex.com and FXCM have been doing for quite some time, with the bulk of marketing targeting the Asian markets.

Below is the announcement from OANDA’s forum:

Hi Everyone,

As of August 22, 2014, at 3 p.m. EDT, OANDA Corporation will discontinue offering precious metals trading on the fxTrade platform for our U.S.-based retail clients or any client with an OANDA Corporation account. This business-related decision was made because U.S. citizens are not permitted to trade these instruments with leverage.

If this change affects you, we recommend you close all precious metal open positions by/before August 22, 2014, at 3 p.m. EDT, or OANDA will close those trades on your behalf at that date and time.

If you are not a U.S. citizen and you reside outside of the United States, you may open an fxTrade account in one of our other divisions where precious metal trading with leverage is permitted.

If you require more information, please contact our Client Experience team at your convenience.

The OANDA Team

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