Saxo Bank Launches New Collateral Solution, Strengthening FX Prime Brokerage

The new solution will help mitigate the over-allocation of capital, allowing clients to utilize a single pool of collateral.

Danish multi-asset provider Saxo Bank has bolstered its foreign exchange prime brokerage capabilities by implementing a new cross-collateralisation facility between PrimeXM sites in New York, London and Tokyo, helping provide FX direct market access (DMA), per a company statement.

The new initiative and cross-collateralisation facility is important as it will help support Saxo Bank’s existing prime clients with global liquidity needs to facilitate and streamline their collateral by synchronizing balances and exposures across the three aforementioned primary global FX locations in New York, London and Tokyo.

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By helping optimize clients’ multi location FX DMA, Saxo Bank will also help mitigate episodes of over-allocation of capital, thereby assisting clients by utilizing a single pool of collateral. The timing of the new facility is also important given that it has occurred at a juncture in which the FX prime brokerage space is rapidly shifting – many larger banks have withdrawn from the market due to the rising cost of risk.

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According to Peter Plester, Head of FX Prime Brokerage, in a statement on the launch: “We have seen exceptional demand for our service and fantastic momentum since the introduction of pre-trade credit risk controls. As a result, our client base has been growing both in numbers but also size and complexity, which plays to our strength of both being able to innovate through technology as well as our global reach. “

“Our ambition remains to continue to lead in the FX prime brokerage space where we have over 20 years’ experience in creating liquidity for a leveraged FX client base,” he added.

“By adding the cross-collateralisation facility, our clients will benefit from access to local liquidity per site, without having to divide up the collateral allocated per site. The combined solution gives them real collateral efficiency as well as extremely efficient pre-trade risk controls,” explained Lucian Lauerman, Head of API Business at Saxo Bank.

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