Saxo Bank was one of the most active brokers in the market in 2015, when the company launched its new platform SaxoTraderGO and its Open API. The Danish multi-asset brokerage is mainly relying upon the latter product to provide its white label clients with enough options to fulfill the specific needs of their clients.
Kim Fournais, the CEO of Saxo Bank, spoke with Finance Magnates to elaborate on the latest changes and on the upcoming strategic shifts of the company. In the coming quarters the changes are numerous and include a more in-depth version of the HTML5 trading platform – SaxoTraderPRO.
This year Saxo Bank has attracted the most client assets on record. How was this milestone achieved?
Primarily our clients have continued trusting our business model that is different to what many other firms in the industry have. For us it is very important to grow client collateral every single year. Just two and a half years ago we had about 50 billion Danish krone ($7.65 billion) and now the amount is closer to 80 billion Danish krone ($12.22 billion) plus another 2 billion euros in our asset management unit.
What are the plans of Saxo Bank a year into the SaxoTraderGO launch?
SaxoTraderGO is the simpler platform that we are offering built on a bedrock of innovation and an intuitive user experience. There are a lot of enhancements planned for SaxoTraderGO that we will announce in the coming months, and for the professional clients that are using our desktop platform we have a new platform in the pipeline that will also be based on HTML5, but with a layer of additional sophistication.
We are also building out our integrated automated trading and investment solution called SaxoSelect. The interest in SaxoSelect has thus far been very positive. Today we offer alpha seeking strategies based on CFDs, futures, FX as well as diversified cash based ETF portfolios in cooperation with BlackRock. We are also working on offering more strategies. For instance, we have demand for ‘Smart Beta’ portfolios based on cash stocks. SaxoSelect is our answer to the growing group of private investors that do not have the time or the expertise to trade themselves but still want diversification and a return on their savings.
What other product development tools would you highlight?
In September, we launched the OpenAPI, which is what we call ‘open bank concept’. It allows any fintech company or financial institution to access our complete digital value chain. Web programmers have the ability to develop on top of our offerings which provides limitless possibilities. Since we launched, we have signed up a number of robo-advisors who, in turn, are developing some very advanced front-end apps. For them to get access to a true multi-asset infrastructure is a very compelling prospect and I think that this is unique in the marketplace. We are also going to build an app store, which will allow us to deliver to our clients a variety of modules and solutions that are designed to both facilitate their trading decisions and improve their user experience.
What has been the main strategic direction of Saxo Bank after the launch of SaxoTraderGO and Open API?
Saxo is extremely well positioned to take advantage of major shifts in the world economy, demographics, technology and regulation. These changes give rise to challenges as well as unique opportunities. Saxo Bank will position itself to take advantage of these changes by continuing to be disruptive and by adding significant value to clients globally. We believe our status as a regulated entity combined with our strong digital foundation put us in a unique position to build scale as a global financial markets facilitator – both for our direct clients as well as our partners.
We have been in the white labeling business since 2001. At present we have 120 white label partners and this is an area that we believe has a lot of potential. Working together to create a better experience for the clients is very important and Saxo Bank is uniquely positioned to take advantage of the situation. We cannot be the best at selling to clients all over the world, as there are a number of locally based institutions that have experience with particular markets. Our white label concept and open API allows us to leverage economies of scale or gain faster and more efficient access to market through technology.
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China is a place where we have focused our efforts, manifesting in the recent announcement of some strategic partnerships in the region. The same is true for Africa, Latin America, Central and the Middle East and we are actively looking for more partners in these and other regions.
Has Saxo Bank been changing its approach towards onboarding clients?
We are seeking to educate our clients proactively via our SaxoTraderGO platform where we have added some modules to help facilitate that process – we truly want our clients to be as informed and successful as they can possibly be.
How has business outside of FX and CFDs been going for Saxo?
Since we launched our stock options and options on futures products we have seen tremendous growth. We have also seen a lot of growth in the physical stocks too. The change in our FX offering has definitely changed the game for us. We were late to the market in updating our trading conditions but we are clearly bucking the wide industry trend now. We are beginning to see some growth while other trading venues have been consolidating.
Why did it take so long to update your FX offering?
We have a new team on board which took us into a new direction. Our offering at present is very competitive and this shows in our trading volumes. Right now we have one of the best offerings on the market with deep liquidity, tight spreads and low commission rates especially for clients that trade a lot.
How will Brexit affect the FX market and are there any prospects that industry disturbance will be similar to the SNB crisis of last year?
The good thing about the EU referendum in the UK when compared to the SNB event is that we all know that it will happen on the 23rd of June. We are strongly advising our clients to reduce their leverage and to diversify. We advise our clients to trade options in case they want to trade this market.
How is Saxo Bank preparing for the event and what has changed since the events of January 2015?
We are doing the utmost to educate our clients on the range of options available to them to ensure smooth execution. We launched a number of initiatives including a “UK EU Referendum” webpage to support clients in the run-up to and following the event. To protect our clients, we will also temporarily increase margin requirements for GBP.
Since the Swiss event we have changed the teams, structure, and defence mechanisms in our risk management function. If lightning was to strike twice, things would be very different. Our suggestion for Brexit is that traders should employ lower leverage and diversify their exposure and we are promoting the use of long options which are unleveraged, and can be used to express both long and short volatility and directional views.