From the September 01, 2011 issue of Futures Magazine • Subscribe!

Forex Trader's Bill Of Rights

Excerpt from September's Q&A with Michael Stumm

In our September issue we talk to Michael Stumm, co-founder of forex broker Oanda. Stumm and high school trading buddy Richard Olsen founded Oanda, which has brought institutional efficiencies to retail forex traders. In 2005 Oanda put together its, “Forex Trader’s Bill of Rights.”

Here we discuss with Stumm the importance and logic behind each of those rights.


FM: In 2005 your firm published a "Forex Trader's Bill of Rights" that enumerated your philosophy on markets. Why was it important? Have others incorporated these rights in their models or is it still unique to you?

MS: That was published six years ago and we are a little surprised that it is as valid today as it was back then. Things haven't changed that much. It has moved a little in the direction of the Forex Bill of Rights because the regulators have forced the hand of some of the brokers, but a lot of the points still are very valid. When we published it, the first few people we showed it to said, 'Oh man everyone else in this industry is going to get very angry, particularly the big banks.' For us, what was important was to disclose to the public some of the practices [at] forex firms and banks because a lot of clients don't know what is going on. It is such a non-transparent business. In that sense, even today we find very positive reaction to it when people read it, they say 'I didn't know this was occurring, this is outrageous.'

FM: Lets go over why each of them is so important: 1) The right to immediate, uncensored access to he marketplace.

MS: This has to do with the practice that when you trade and the market makers realize they won't make as much money on it or may lose money on it they immediately reject the trade. When you trade, that trade should be executed as quickly as possible and the slippage shouldn't be large. The trade shouldn't be delayed and you shouldn't be rejected; that all has to do with quality of execution.

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