This document, amana’s transparency statement, is the foundational work for our collective. It lays out how amana treats each financial product in its system for pricing, risk management and revenue generation. 

amana offers a variety of exchange-traded stocks. These stocks are traded on an organized exchange, an approved alternative trading venue, or directly with specialists or market makers that provide liquidity in those stocks. The price of each transaction must meet certain regulatory requirements, and these requirements tend to differ by country.

In the U.S., for example, there’s always a nationally recognized best bid and offer, sometimes referred to as the NBBO. In practice, that means brokers are generally required to execute trades at or better than that price. All amana exchange-traded stocks are executed in a fully compliant manner determined by each country's best execution rules.

For many years, brokers who executed stocks in the U.S. stock market would charge commissions to execute their clients’ orders—a fee for the service they provided. In addition to these commissions, they’d generally structure deals to loan out their clients’ stocks to others who wanted to short stocks and earn extra money on their clients’ portfolios. They would also structure execution arrangements directly with specialists or market makers, on or off the exchange floor, to send their clients’ orders to those market makers. In return, brokers would receive a payment for their order flow (PFOF), and the client could benefit from a small price improvement and would not be filled worse than the NBBO price.

Over the recent years, some companies started to do away with commissions and just make their money on the payments they receive. There was no need to charge more commission on top, as that seemed like a double dip, so the result was a cheaper experience for many investors.

Many traditional companies couldn’t afford to cut their commissions or, more likely, didn’t want to since it cut their profit margins. Today, however, clients have succeeded in a more cost-effective investment experience, and this has helped open access to a much larger base of customers through fractional investing. We believe this is a positive development. PFOF is a hot topic, but amana believes that while the regulations regarding this practice should evolve, retail customers have benefited from lower costs and better access.

So, at this time, this is how we do things: when you give us your stock order, we send it to a market maker or an exchange. They execute your order at a better price, or at the NBBO, and give us a small payment for doing that. We take that payment and use it to pay for the technology, the people, and everything that you know as amana today. We also generate additional revenue by loaning out stock from our portfolio.

amana hails from the MENA region. Our community is for the region and built by people who understand it. How could we offer stocks without offering regional stocks? When we looked into the regional space, we were very surprised by what we saw. It’s very expensive and needs to modernize. Basically, the rates to execute a trade are all about the same, but with volume, you can get some breaks. The rates all start out high for individuals, though, and that’s not fair.

So, we decided that trading regional shares is going to be on us. We don’t make any money on this at all, and this is in writing. We take the cost that we’re charged by our clearing brokers, and we only charge you that. It’s that simple: our cost is your cost. We want to build our community in the region, and this is a symbol of that. And when we grow, these rate costs will go down even more. Then, maybe the other brokers in the space and the exchanges will get the point and make lowered rates more accessible to all.

“We take the cost that we are charged by our clearing brokers, and we only charge you that. It’s that simple: our cost is your cost.”

Derivatives are financial products that track another underlying thing. Generally, they use leverage so you don’t have to put up the full value of the thing you want to buy or sell, and that amplifies the loss or gain due to that leverage. You can trade derivatives on the S&P 500, gold, shares of stock like Tesla, foreign exchange like the EURUSD, and more. There are derivatives on almost everything, and you can trade them all from a single account and choose to use leverage or not.

When using leverage to make a profit, also keep in mind that it will amplify any losses. Derivatives are one of the most dangerous financial products out there. In fact, the vast majority of people that trade derivatives will lose money. Be careful. In our system, we put a big lightning bolt symbol on these products to make it clear to you that they are “electric.”

So, how does amana treat these things, and why do we even have them? We have them because they’re popular, and people ask to trade them. They are also useful because they allow people to trade the largest array of “stuff” easily, in a single account. Our never-ending job will be to educate people about leverage and the dangers of derivatives. However, if you want to trade stocks from every global exchange in a single account, along with gold, EUR/USD, oil and Bitcoin, you can do it all and more with a derivative. When using derivatives, take it slow. Don’t use a lot of leverage, or you’ll quickly become a part of the 80%.

So, what do we do? How do we make our money? For derivatives, we make our money on:

1. The spread.
2. The management of the risk on the transactions.
3. The financing for providing the leverage.