Saxo Bank’s Blaafalk Discusses the Group’s Capitalization and Losses
- Saxo Bank has been one of several industry leaders that has escaped calamity as a result of the surge of volatility last week.
Saxo Bank has been one of several industry leaders that has escaped calamity as a result of the surge of Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term last week – Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates spoke with Steen Blaafalk, CFO at Saxo, about the group’s regulatory requirements and potential losses.
Last week, Mr. Blaafalk touched on the prudent planning of Saxo Bank, which took preventative steps as early as September to avoid major losses or breaches of client funds.
1.) While it seems a forgone conclusion that Saxo Bank will meet its Regulatory Capital requirements, what is the size or scale of the amount of unsecured margin collateral that Saxo will incur as a loss?
We have a clear overview but I can’t comment on specific numbers. Saxo Bank is liaising with these clients to settle such unsecured amounts and it’s expected that some clients will not be able to the settle the balance in full and that the bank will incur losses in this respect. However, even in the unlikely event that Saxo Bank would not be able to recover any of the outstanding amounts, Saxo Bank would still fulfill its regulatory capital requirements.
2.) In what ways will Saxo Bank be stronger than before as a result of this event, and has there been a large amount of new business as a result of other brokers' shortcomings or capital inadequacies?
Yes, we have seen a net inflow of clients over the weekend. I think all the banks and brokers that survived this incident will be stronger going forward but I also believe many will have to change the way they are conducting their business. We are entering a new regime. Volatility is rising and to reflect potential increase in risk and to protect clients, banks and brokerages have to raise their margin, the sooner the better.
Saxo Bank has been one of several industry leaders that has escaped calamity as a result of the surge of Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term last week – Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates spoke with Steen Blaafalk, CFO at Saxo, about the group’s regulatory requirements and potential losses.
Last week, Mr. Blaafalk touched on the prudent planning of Saxo Bank, which took preventative steps as early as September to avoid major losses or breaches of client funds.
1.) While it seems a forgone conclusion that Saxo Bank will meet its Regulatory Capital requirements, what is the size or scale of the amount of unsecured margin collateral that Saxo will incur as a loss?
We have a clear overview but I can’t comment on specific numbers. Saxo Bank is liaising with these clients to settle such unsecured amounts and it’s expected that some clients will not be able to the settle the balance in full and that the bank will incur losses in this respect. However, even in the unlikely event that Saxo Bank would not be able to recover any of the outstanding amounts, Saxo Bank would still fulfill its regulatory capital requirements.
2.) In what ways will Saxo Bank be stronger than before as a result of this event, and has there been a large amount of new business as a result of other brokers' shortcomings or capital inadequacies?
Yes, we have seen a net inflow of clients over the weekend. I think all the banks and brokers that survived this incident will be stronger going forward but I also believe many will have to change the way they are conducting their business. We are entering a new regime. Volatility is rising and to reflect potential increase in risk and to protect clients, banks and brokerages have to raise their margin, the sooner the better.