Saxo Bank Migrates Its Spread Bet Offering over to Capital Spreads, LCG

Saxo Spreads, the firm’s spread betting division, issued a notification to clients today informing them that it was withdrawing its services and migrating the business over to Capital Spreads. Saxo entered the space in 2009 after financial markets benefited from a post-2008 recession boost in volumes. However, with an overall decline in the number of active traders in the region, the firm has decided to withdraw its service.

Saxo Bank was unavailable for comment.

In the note the firm stated: “From 28th March 2015 your Saxo Spreads account will move to Capital Spreads.”

The firm’s website has not been updated and still displays the Saxo Spreads brand, however, upon applying for a new account the page redirects to the Capital Spreads website.

The firm was using services provided by spread betting specialist, London Capital Group, under the Capital Spreads brand, a trading name of LCG. Clients have been advised on how they can continue to use the services offered by Capital Spreads, however an option to close the account has also been provided. The email was sent by James Watts, Head of Partnerships.

Saxo entered the market in 2009, according to the FCA register it received its appointed representative license under the banner of LCG on the 29th of January, 2009. The firm offered a range of instruments including, rolling and futures stock indices, commodities, bonds, single stocks and FX. The firm offered competitive pricing on instruments, with spreads on the FTSE quoted as 1 pip, during UK trading hours.

Saxo Bank Bullish for 2015

Saxo Bank was the latest provider to issue its annual earnings data, the firm like its peers, showed positive earnings for the year-end 2014 with both net profits and client deposits, in the green. In its annual report, the firm commented on its futures, plans among other topics, it said: “Saxo Bank expects to continue the on-going development of its traditional trading business. The focus remains on clients, efficiency, profitability and optimisation of the entire value chain.

Further focus on White Label Business, Institutional Business, High Net Worth Private Business and Digital Business is planned. Cost control, capital and Liquidity management are, as ever, on-going themes for Saxo Bank in 2015.

With a close eye on overall cost development, Saxo Bank will continue its investments in products and platforms. At the same time, system enhancements and knowledge upgrades are expected within the Bank’s core business areas.”

UK Spread Bet Market

The UK spread betting landscape has suffered from a downturn in Volatility , coupled with the bull-run in UK and global equity markets, thus luring investors away from leveraged instruments. According to research submitted by Investment Trends, the number of financial spread betters in the UK reduced YoY in 2014, the research noted that the number of traders contracted 8% to 78,000 from 85,000.

Spread betting, a subset of derivatives trading offers UK-based traders a tax-free solution to profits they earn during trading, however, profits can only be claimed if the trader has an existing income and spread betting is not his main source of income. On the other hand, brokers who earn funds (client losses) need to submit a general betting duty (return) to the government equating to 3%.

The number of traditional FX and CFD providers that entered the spread betting space has increased over the last 3 years, in 2013, Inter Trader joined providers offering the UK-centric product. At the same time, Cantor Index reported that it had withdrawn its service and sold its client base to Spreadex.