Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
OANDA CORPORATION
Year ended December 31, 2016
KPMG LLP
Bay Adelaide Centre
Suite 4600
333 Bay Street
Toronto, ON
M5H 2S5
Telephone (416) 777-8500
Fax (416) 777-8818
www.kpmg.ca
Report of Independent Registered Public Accounting Firm
The Board of Directors
OANDA Corporation:
We have audited the accompanying statement of financial condition of OANDA Corporation (Parent
Company Only) as of December 31, 2016 (“the financial statement”). The financial statement is the
responsibility of the Company’s management. Our responsibility is to express an opinion on the financial
statement based on our audit.
We conducted our audit in accordance with the auditing standards of the Public Company Accounting
Oversight Board (United States) and in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the financial
position of OANDA Corporation (Parent Company Only) as of December 31, 2016, in conformity with U.S.
generally accepted accounting principles.
Chartered Professional Accountants, Licensed Public Accountants
March 6, 2017
Toronto, Canada
KPMG LLP is a Canadian limited liability partnership and a
member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. KPMG Canada provides services
to KPMG LLP.
OANDA CORPORATION
Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
December 31, 2016
2016
Assets
Cash and cash equivalents (note 3)
Due from related parties (note 10)
Property and equipment, net (note 6)
Accounts receivable
Intangible assets (note 7)
Income taxes receivable
Due from broker (notes 4 and 5)
Other assets
Investment in subsidiaries
Total Assets
$ 249,074,084
12,049,358
1,278,573
1,849,411
779,641
43,904
3,508,794
1,848,652
14,670,219
$ 285,102,636
Liabilities and Stockholder’s Equity
Liabilities:
Amounts due to customers (note 3)
Due to related parties (note 10)
Accounts payable and accrued expenses
Deferred revenue
Due to broker (notes 4 and 5)
Deferred lease inducement
$ 153,718,641
17,395,289
2,635,552
3,218,855
452,599
9,519
$ 177,430,455
Stockholder’s equity:
Common stock
($0.01 par value, 1,000 shares, authorized, issued and outstanding)
Additional paid-in capital
Retained earnings
Total Liabilities and Stockholder’s Equity
10
54,802,055
52,870,116
$ 107,672,181
$ 285,102,636
See accompanying notes, which are an integral part of the parent company only statement of financial
condition.
1
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
1.
Nature of business:
OANDA Corporation (the "Company"), a Delaware corporation incorporated on November 14,
1996, is a global provider of innovative foreign exchange trading services. The Company's
principal business activities are online foreign exchange trading, exchange rate subscription
services, and licensing of its trading software. The Company is a registered Futures Commission
Merchant with the Commodity Futures Trading Commission and a member of the National
Futures Association.
On October 1, 2015, the Company adopted a holding company form of organizational structure,
with OANDA Global Corporation (”OGC”), a Delaware corporation, serving as the new parent of
OANDA Corporation. The Company, OGC and merger subsidiary entered into a Merger
agreement for the purpose of effecting the holding company reorganization. The merger
subsidiary merged with and into the Company, with the Company being the surviving entity. As
a result of the reorganization, each share of common stock of the Company that was issued and
outstanding, as well as related stock options and warrants, immediately prior to the reorganization
was converted into one share of common stock, stock option or warrant of OGC.
On January 1, 2016, the Company transferred to OGC 100% of the ownership in all of its
subsidiaries except for OANDA (Canada) Corporation ULC, OANDA India Private Limited,
OANDA Hong Kong Ltd. and Currensee Global Inc. This included the transfers of OANDA Asia
Pacific Pte Ltd, OANDA Japan Inc., OANDA Australia Pty Ltd, and OANDA Europe Ltd. The
transfer of ownership in these entities was for nil consideration and resulted in nil gain or loss
due to the entities being under common control. The subsidiaries not transferred remain wholly
owned subsidiaries of the Company.
The Company’s principal sources of revenues are as follows:
(a) Foreign exchange trading:
The Company provides online margin trading focused primarily on over-the-counter foreign
exchange trading for speculative or investment purposes. Trading is conducted through the
Company's proprietary trading platform, a fully automated trading platform in which the
Company plays the role of market-maker. Customers are required to post collateral to
support their trading on margin. The Company economically hedges its exposure with major
financial institutions, as considered appropriate, to unmatched trades in foreign exchange to
ensure that it is not unacceptably exposed to material losses.
2
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
1.
Nature of business (continued):
The Company’s subsidiaries and affiliates have the ability to hedge their client positions with
the Company. If the subsidiary or affiliate hedges their customer trading positions with the
Company, a hedging realized and unrealized gain or loss is recognized on the trade. The
Company is not subject to the segregation requirements for customers’ deposits on U.S.
commodity exchanges pursuant to Section 6d(a)(2) under the Commodity Exchange Act
("CEA"), or to the requirements of Regulation 30.7 under the CEA for foreign futures and
foreign options customers.
(b) Exchange rate subscription revenue:
The Company provides currency data feeds to companies for their back office operations
and websites.
(c) Service revenue:
The Company entered into an agreement with related entities to provide business consulting
services which include management services and other corporate functions. Under this
agreement, the Company charges a service fee.
(d) License fee revenue:
The Company licenses its trading software to certain third parties on a term basis, which in
turn offer currency and derivative trading to their clients. Additionally, license fees relate to
an agreement entered into by the Company with certain related parties. This agreement is
titled “Trading Platform License, Support & Profit Sharing Agreement”. Under this agreement,
the Company agreed to license its trading platform and the “OANDA” trademark for the
purpose of the related parties offering an internet-based foreign exchange and contract for
difference (“CFD”) trading platform to its clients.
2.
Significant accounting policies:
(a) Basis of presentation:
The Company's parent company only statement of financial condition is prepared in
accordance with accounting principles generally accepted in the United States of America
("U.S. GAAP") and is presented in U.S. dollars, except that the parent company only
statement of financial condition does not consolidate the Company’s subsidiaries.
Investments in subsidiaries are carried at cost.
3
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
2.
Significant accounting policies (continued):
This parent company only statement of financial condition was prepared to comply with NFA
Rule 2-36, Requirements for Forex Transactions. The Company has also separately issued
consolidated financial statements. The Company's parent company only statement of
financial condition include investments in the following wholly-owned subsidiaries:
(1)
OANDA (Canada) Corporation ULC
(2)
OANDA Hong Kong Ltd.
(3)
OANDA India Private Limited
The Company also had an investment in Currensee Global Inc. This entity was dissolved
during the year ended December 31, 2016 and accordingly, the Company wrote-off its
investment in, and receivable from Currensee Global Inc.
(b) Use of estimates:
The preparation of the parent company only statement of financial condition in accordance
with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the statement of financial condition. In preparing the statement of financial
condition, significant estimates management makes include the valuation of assets and
liabilities requiring fair value estimates, the allowance for doubtful accounts, realization of
deferred tax assets, intangible asset useful lives and indicators of impairment and
assumptions included in the determination of stock-based compensation which also includes
a number of estimates and assumptions associated with deriving an estimated fair value of
the OGC stock price on the stock option grant date. Estimates, by their nature, are based on
judgement and available information. Actual results could differ from those estimates and
could have a material impact on the statement of financial condition.
(c) Revenue recognition:
The Company generates revenue from foreign exchange margin trading, licensing of its
trading platform, business consulting services and exchange rate subscription services.
(i) Foreign exchange trading:
Realized gains and losses from closed trades are calculated using the specific
identification method.
4
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
2.
Significant accounting policies (continued):
Unrealized gains and losses on open trades are calculated using the prevailing spot rate
of exchange on the reporting date and are included in cash and cash equivalents and
amounts due to customers, as applicable. Interest earned by or charged to customers
is calculated on a daily basis.
Net revenue from foreign exchange trading represents realized and unrealized gains and
losses from the Company's closed and open positions with its liquidity providers, net of
realized and unrealized gains and losses on clients' closed and open positions with the
Company and interest earned by or charged to customers, net of interest earned or
charged to the Company by its liquidity providers. Spot transactions with financial
institutions are entered into in the normal course of business in order to hedge market
exposures resulting from transactions with clients. Such currency contracts are carried
at fair market value.
(ii) License revenue:
Revenue from term-based licenses is recognized when realized or realizable on a
straight-line basis over the contractual term of the agreement or the expected period
during which those services will be provided. The Company's license services may
require it to perform one-time set-up activities with a related upfront set-up fee and
provide maintenance services. These fees are recognized ratably over the term of the
contract.
(iii) Service revenue:
Revenue is recognized when the services have been performed, evidence of an
arrangement exists, price for the services is fixed, and collectability is reasonably
assured.
(iv) Exchange rate subscription services:
Revenue exchange rate subscription services is recognized when realized or realizable
on a straight-line basis over the contractual term of the agreement or the expected period
during which those services will be provided. Subscription services are billed in advance
and the revenue is deferred until the service is provided.
(d) Interest income:
Interest income consists of interest earned on cash and cash equivalents and is recognized
in the period earned.
5
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
2.
Significant accounting policies (continued):
(e) Stock-based compensation:
The Company’s employees have been granted stock-based awards in the shares of OGC.
As a result, the Company is a member of a consolidated group whose employees, or
grantees, meet the definition of an employee of an entity in the consolidated group.
Accordingly, the award of OGC shares granted to the Company’s employees is accounted for
using employee accounting in this subsidiary statement of financial condition. Stock-based
compensation expense related to the grant of these share options has been recorded with a
corresponding credit to equity, representing OGC’s capital contribution. Stock-based
compensation is accounted for using the fair value method, which requires the measurement
and recognition of compensation cost for stock options to be based on their estimated fair
values and is equity classified.
(f) Foreign currency translation:
The Company's functional and presentation currency is U.S. dollars. Foreign denominated
assets and liabilities are translated into U.S. dollars at exchange rates at the date of the
parent company only statement of financial condition.
(g) Income taxes:
Income taxes are accounted for using the asset and liability method, which requires
recognition of deferred tax assets and liabilities based upon temporary differences between
the statement of financial condition and income tax bases of assets and liabilities using
currently enacted tax rates. The Company operates under a permanent reinvestment
strategy, under which earnings derived from foreign operations remain invested in the
Company’s foreign subsidiaries. In accordance with relevant accounting guidance, the
Company does not recognize domestic tax expense related to the permanently reinvested
earnings. The Company has no plans to repatriate accumulated unremitted earnings as of
December 31, 2016.
(h) Cash and cash equivalents:
Cash and cash equivalents include cash and highly liquid investments with original maturities
of ninety days or less. The carrying amount of cash and cash equivalents approximates fair
value because of the short maturity of these investments. Cash balances may be in excess
of insured limits. Cash and securities held for customers represent cash and other highly
liquid assets held to fund customer liabilities in connection with trading positions. Included in
this balance are funds deposited by customers and funds accruing to customers as a result
of trades or contracts.
6
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
2.
Significant accounting policies (continued):
(i) Fair value measurements:
The Company records certain financial assets and liabilities at fair value. Fair value is defined
at the price that would be received for an asset or paid to transfer a liability in an orderly
transaction between market participants. Fair value measurement establishes a three-level
hierarchy that prioritizes the inputs used to measure fair value.

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices
for identical or similar assets and liabilities in markets that are not active; or other inputs
that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs that are supported by little or no market activity.
As of December 31, 2016, the Company's derivative assets and liabilities are classified as
either Level 1 or level 2 (note 5). Other financial assets and liabilities including cash and cash
equivalents, accounts receivable, amounts due to customers, and accounts payable and
accrued expenses, are recorded at carrying amounts, which approximate fair value due to
their short-term maturities. As of December 31, 2016 the Company did not have any Level 3
financial assets or liabilities.
(j) Derivatives:
The Company enters into futures contracts to economically hedge the open customer
contracts of its foreign affiliates CFD business. Futures contracts are exchange traded
contracts to either purchase or sell a specific asset at a specified future date for a specified
price. CFDs allow for the exchange of the difference in value of a particular asset such as a
stock index or commodity contracts over the life of the contract. As of December 31, 2016,
the Company's CFD hedges include future contracts for commodities and stock indices. The
Company's derivative contracts are accounted for at fair value.
The Company enters into forward contracts to reduce its exposure to fluctuations in foreign
exchange rates. The Company does not use any derivative financial instrument for
speculative purposes. The fair value of these derivatives is included in due from broker when
in a gain position and due to broker when in a loss position.
7
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
2.
Significant accounting policies (continued):
(k) Business concentrations and credit risks:
Financial instruments, which subject the Company to concentrations of credit risk, consist
primarily of cash and cash equivalents and accounts receivable. The carrying amounts of
these financial instruments approximate fair values due to their short-term nature. The
Company maintains cash with various financial institutions. The Company performs periodic
evaluations of the relative credit standing of these institutions.
In addition, the Company performs ongoing credit evaluations and establishes an allowance
for doubtful accounts based upon factors surrounding the credit risk of its subscription
customers, historical trends and other information.
(l) Accounts receivable:
Accounts receivable consists primarily of amounts due from customers relating to the
Company's license and exchange rate subscription services. Accounts receivables are
shown net of an allowance for doubtful accounts. The allowance for doubtful accounts is
maintained at a level that management believes to be sufficient to absorb estimated losses
from uncollectible amounts. The allowance is increased by the provision for bad debts which
is charged against operating results and decreased by the amount of charge-offs, net of
recoveries. The amount charged against operating results is based on several factors
including, but not limited to, a continuous assessment of the collectability of each account,
the length of time a receivable is past due and historical experience with the customer. As
of December 31, 2016, an allowance for doubtful accounts of $70,494 was netted against
accounts receivables in the parent company only statement of financial condition.
(m) Property and equipment, net:
Property and equipment are recorded at cost net of accumulated depreciation. Additions
and improvements that extend the life of an asset are capitalized and expenditures for
maintenance and repairs are charged to expense as incurred. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets as follows:
Computer equipment
Computer software
Furniture
Leasehold improvements
3 or 7 years
3, 7 or 10 years
3 years
Shorter of lease term or
asset's estimated useful life
8
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
2.
Significant accounting policies (continued):
The Company evaluates the potential impairment of its property and equipment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The Company recognizes an impairment loss, when and if necessary, by
recording a reduction in the carrying value of the asset if the carrying amount of the asset
exceeds its fair value based on anticipated undiscounted cash flows.
(n) Intangible assets:
Intangible assets, net, includes customer accounts that were acquired from IBFX Inc. in
March 2016 (note 7). Purchased intangible assets other than goodwill are amortized over
their estimated useful lives unless their lives are determined to be indefinite. If the assets
are determined to have a finite life in the future, the Company will amortize the carrying value
over the remaining estimated useful life at that time. Customer accounts acquired are finitelived intangible assets and are amortized on a straight-line basis over their estimated average
useful life of 30 months.
For the finite-lived intangible assets subject to amortization, impairment is considered upon
to occurrence of certain ''triggering events'' and is recognized if the carrying amount is not
recoverable and exceeds the fair value of the intangible asset.
(o) Amounts due to customers:
Amounts due to customers include amounts received from clients as margin, net of
withdrawals, interest earned net of charges, unrealized gains and losses on clients' open
positions, as well as gains and losses on closed positions. The fair value of clients' open
positions (unrealized gains and losses) is determined based upon financial institutions'
quotations.
(p) Amounts due from/to broker:
Due from/to brokers represents the amount of the unsettled spot currency trades that the
Company has with financial institutions. Also included in due from/to brokers is the fair value
of derivative financial instruments discussed above and in note 5. The amounts due from/to
broker are carried at contracted amounts which approximate fair value based on market price
quotations obtained from independent brokers. The Company has master netting
agreements with its respective counterparties which allows the Company to present due
from/to brokers on a net-by-counterparty basis.
9
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
3.
Cash and cash equivalents:
As at December 31, 2016, cash and cash equivalents included the following:
4.

$39,265,341 deposited as margin by the Company to support its open foreign
exchange positions and $26,617,132 in trading accounts held with various financial
institutions.

$153,718,641 deposited by customers and net of realized and unrealized gains or
losses from customer trading activity. The Company records a liability in connection
with this amount that is included in amounts due to customers in the parent company
only statement of financial condition.

$29,472,970 deposited in bank accounts and held to fund the ongoing operations of
the business.
Due from/to broker:
Due from/to broker in the parent company only statement of financial condition includes a loss
of ($452,599) and gain of $27,993 in unsettled spot currency trades that the Company has open
with its financial institutions. It also includes the fair value of derivative financial instruments of
($411,214) which is explained further in note 5. The Company has master netting agreements
with its respective counterparties under which its positions are presented on a net-bycounterparty basis.
5.
Derivatives:
As at December 31, 2016, the Company has open futures contracts used to manage the
Company’s exposure to open customer contracts of its foreign affiliates CFD business. The
futures contracts have a notional value of $18,309,013 long and ($182,706,686) short for which
the Company provided collateral of $1,786,807. The unrealized profit or loss on these contracts
as at December 31, 2016 is a loss of ($322,548) and is included in due to broker in the parent
company only statement of financial condition. The futures contracts are classified as level 1
instruments in the fair value hierarchy.
The Company also enters into forward contracts to reduce its foreign currency exposure from its
investment in subsidiaries. As at December 31, 2016, the notional value of the open derivative
contracts related to this hedging activity is $9,247,616 for which the Company provided collateral
of $2,105,208. The fair value on these open positions as at December 31, 2016 is ($88,666) and
is included in due to broker in the parent company only statement of financial condition. The
forward contracts are classified as level 2 instruments in the fair value hierarchy.
10
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
5.
Derivatives (continued):
The following table presents the gross and net fair value of the Company’s derivative transactions
and the related offsetting amount as of December 31, 2016. Derivative assets and liabilities are
net of counterparty and collateral offsets
Collateral offsets include cash margin amounts posted with brokers. The net amount is
included in due from brokers on the parent company only statement of financial condition.
Cash
Collateral
FX forward contracts
Futures contracts
Futures contracts
6.
$ 2,105,208
1,333,480
453,327
$ 3,892,015
Net amounts of
assets/(liabilities)
presented in the
statement of
financial condition
$ 2,016,542
844,802
619,457
$ 3,480,801
Property and equipment, net:
2016
$ 5,768,746
670,578
62,215
2,932
6,504,471
Computer equipment
Software
Furniture
Leasehold improvements
Less accumulated depreciation and impairment
7.
Net amounts of
assets/(liabilities)
for derivative
open positions at
fair value
$ (88,666)
(488,678)
166,130
$ (411,214)
5,225,898
$ 1,278,573
Intangible assets:
On February 3, 2016, the Company entered into a purchase agreement for the acquisition of a
client portfolio from IBFX, Inc. The closing date of the purchase was March 4, 2016 at which point
the Company paid $1,169,461 for assets under management that were transferred to the
Company. The purchase consideration for the client portfolio was recognized as an intangible
asset per the parent company only statement of financial condition. The intangible asset is being
depreciated over 30 months which is the estimated life of the acquired clients. During the year
ended December 31, 2016 there were no triggering events indicating a risk of an impairment.
11
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
8.
Income taxes:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company's deferred tax assets and liabilities are
as follows:
2016
Deferred tax assets:
Stock-based compensation
Property and equipment
Deferred revenue and accruals
Tax credit carry forwards
Valuation allowance
Deferred tax assets
$ 3,472,498
1,246,443
1,199,286
5,881,502
(11,799,729)
$
-
The Company has not recognized a temporary difference associated with investments in
subsidiaries as the Company ultimately controls whether the liability will be incurred and it is
satisfied that it will not be incurred in the foreseeable future. The temporary differences relate to
undistributed earnings of that Company's subsidiaries. Dividends declared would be subject to
withholding tax in the range of 0-30%, depending on the jurisdiction of the subsidiary.
The Company's U.S. foreign tax credits of $5,881,502 expire in 2023 through to 2036. The
Company files income tax returns in the U.S., Canada and various states and provincial
jurisdictions.
9.
Stock-based compensation:
OGC has a stock incentive plan (the "Plan") that permits the granting of options to purchase up
to an aggregate of 7,000,000 shares of OGC’s common stock to employees, consultants and
non-employee directors of OGC or an affiliate. Under the Plan, OGC may grant either incentive
stock options or non-qualified stock options or both. The Company believes that such awards
better align the interests of its employees with those of OGC’s stockholders.
The following table summarizes the Plan's activity during the year ended December 31, 2016:
Number of
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Life
(Years)
Outstanding as of December 31, 2016
2,183,083
16.01
7.78
Exercisable as of December 31, 2016
1,153,567
14.36
7.34
12
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
10.
Due from/to related parties:
The Company entered into a Services Agreement with OANDA (Canada) Corporation ULC
(“OANDA Canada”) dated December 11, 2006. Under this agreement, the OANDA Canada’s
business consulting and systems integrations and technology groups provided services to the
Company in return for fees on a cost-plus basis.
OANDA Canada’s business consulting group provided strategy, customer relationship, funds
management, accounts administration, legal, compliance, marketing, finance and human
resources services. The Company’s systems integration and technology group provided
solutions that span the entire software life cycle, including consulting, design and development,
maintenance, systems integration and implementation and infrastructure management services.
The Company entered into similar agreements with OANDA Australia Pty Ltd, OANDA India
Private Limited and OANDA Europe Ltd.
The Company entered into a Services Agreement with OANDA (Canada) Corporation ULC,
OANDA Asia Pacific Pte Ltd (“OAP”), OANDA Europe Ltd, OANDA Australia Pty Ltd and OANDA
Japan Inc. (collectively the “Foreign Affiliates”). Under this agreement, the Company provides
business consulting services in return for fees on a cost-plus basis. The Company provides
executive management, strategy, legal, compliance, marketing and finance services.
License revenue relates to an agreement entered into by the Company with each of its Foreign
Affiliates. This agreement is titled “Trading Platform License, Support & Profit Sharing
Agreement”. Under this agreement, the Company agreed to license its trading platform and the
“OANDA” trademark for the purpose of its subsidiaries and affiliates offering an internet-based
foreign exchange and CFD trading platform to its clients. By licensing the platform, the
Company’s subsidiaries and affiliates would be charged a license fee as well as allocated trading
revenue based on their trading activity. As part of the license agreement, the Company’s
subsidiaries and affiliates have the ability to hedge their client positions with the Company. If the
subsidiary or affiliate hedges their own customer trading positions with the Company, a hedging
gain or loss is recognized on the trade.
As at December 31, 2016 the Company has a receivable from its foreign affiliates for business
consulting services and trading gains (losses) recognized on hedging with the Company for
$12,049,358. As at December 31, 2016 the Company has a payable to OANDA India Private Ltd
for $66,826 related to product development services provided by OANDA India Private Ltd to the
Company. The payable is non-interest bearing and due on demand. As at December 31, 2016
the Company has a payable to OANDA Hong Kong Ltd for $3,730,713 related to the Company’s
capital investment in OANDA Hong Kong Ltd. The payable is non-interest bearing and due on
demand.
13
OANDA CORPORATION
Notes to Parent Company Only Statement of Financial Condition
(Expressed in U.S. dollars)
Year ended December 31, 2016
10.
Due from/to related parties (continued):
As at December 31, 2016 the Company had a payable to OGC for trading gains (losses)
recognized by OGC on hedging the foreign currency exposure in its subsidiaries. The gains
(losses) were settled in the Company’s bank accounts resulting in a payable to OGC of $847,750
as at December 31, 2016. The payable is non-interest bearing and due on demand.
As at December 31, 2015 the Company had a subordinated loan payable to OAP totaling
$12,750,000 which matured on August 26, 2016. Upon maturity, in lieu of the Company settling
the loan payable with OAP, the outstanding amount of $12,750,000 was converted into a dividend
payable from the Company to OGC subsequent to the distribution of the loan from OAP to OGC.
The amount of the subordinated loan was recognized in the Company’s taxable income in the
year ended December 31, 2015. As there was no exchange of cash from the Company to OAP
for repayment of the subordinated loan, the dividend payable of $12,750,000 to OGC remains
outstanding as at December 31, 2016, included as part of amounts due to related parties, which
is expected to be settled in 2017.
11.
Commitments and contingencies:
The Company leases its facilities, certain computer equipment and internet service provider
facilities pursuant to non-cancellable operating agreements, expiring at various dates to July 31,
2020. . The future minimum payments under such commitments at December 31, 2016 are
payable as follows:
2017
2018
2019
2020
$
558,901
571,957
555,398
329,466
$ 2,015,722
In the normal course of operations, the Company provides indemnifications, which are often
standard contractual terms, to counterparties in transactions, such as service agreements,
software licenses, leases and purchases of goods. Under these agreements, the Company
agrees to indemnify the counterparty against loss or liability arising from the acts or omissions of
the Company in relation to the agreement or other costs. The nature of the indemnifications in
these agreements prevents the Company from making a reasonable estimate of the maximum
potential amount that the Company could be required to pay such counterparties.
12.
Subsequent events:
The Company has evaluated its subsequent events since December 31, 2016 to the date the
statement of financial condition were issued, which was March 6, 2017. No subsequent events
were identified.
14