NEA backs Index judgement in forex trading

Index Ventures, the European VC, looks set to profit as a US consortium led by NEA has invested $100m in OANDA, a forex trading platform.

A consortium of investors led by US venture firm New Enterprise Associates and including Legg Mason, Cascade Investment, and T. Rowe Price has invested $100 million in forex trading platform OANDA Corporation.

They join existing investor Index Ventures, which led the company’s $17-million Series A investment in September 2005.

OANDA has made it possible for investors to take advantage of tight spreads, more flexible trade sizes, continuous interest, and true straight-through processing, important features that previously were not uniformly available to all investors. 

With the current market volatility, forex trading is increasing.  Some estimate the market is rising to as much as $3 trillion per day in trading, around 80 times larger than the NYSE and NASDAQ combined. A source close to the deal said: “This is significant because ‘risk junkies’ are doubling down on the high risk, high reward FX trading, bucking the more conservative trends.”

NEA, Index and the consortium are hoping to take advantage of this growth. About a year ago, Hotspot FX, a similar elctronic trading paltform, was acquired by Knight Capital Group for $75 million, less than the current funding round. 
OANDA was founded in 1995 and launched its forex trading platform, FXTrade, in 2001. Since 2001, OANDA has been a profitable company and has had triple digit growth each year in its trading volumes. More than 275 million trades have been executed over OANDA's trading platform.