Exclusive: UK Financial Ombudsman Rules Against Saxo in SNB Dispute

More than 2 years after the SNB black swan, Saxo will reimburse just one trader up to £150K.

The Financial Ombudsman Service (FOS), the UK’s official body to settle disputes problems between consumers and UK-based businesses providing financial services, has ordered Saxo Capital Markets UK Limited (SCML) to pay out compensation exceeding £150,000 in the latest lawsuits stemming from January’s exchange-rate turmoil.

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

The London Summit 2017 is coming, get involved!
The client claimed Saxo wrongfully deducted funds from his account after the price revisions, which didn’t reflect market rates. He was asking the commission to declare that Saxo shouldn’t have retroactively repriced the trades. He is also seeking damages for the alleged breach.

Saxo was already left with a capital hole after losing as much as $107 million when the Swiss National Bank abandoned its exchange-rate cap on the franc in January 2015.

Many retail forex traders who lost money when the Swiss National Bank abandoned a trading band for the franc have sued their brokers to recoup part of their losses, particularly after scoring a victory against some firms such as IG Group.

The FOS concluded that the company should pay compensation of up to £150,000, plus any interest and/or costs that it considers appropriate. It should be noted that if the ombudsman believes that fair compensation exceeds the £150,000 cap, it can recommend that the business pays an additional amount – however, that recommendation is not binding and the business is entitled to decide not to comply with it.

In this case, the FOS’s recommended SAXO to reinstate the terms of the original trades of the client, therefore the company should refund the additional loss applied to the client’s account and reinstate the original closing balance. This is in addition to repaying any interest on the negative balance.

Furthermore, simple interest at the rate of 8% per year should be added to the original closing balance from 16 January 2015 to the date of payment.


The Saxo’s client had EUR/CHF put options open on his account. At 09.30.52 on 15 January 2015, just 52 seconds after SNB’s decision, he received trade confirmations that his positions had been closed at 1.1860, leaving his account at £41,789. But after nearly two hours, at 11.52am, Saxo sent him an email saying that owing to market movement in CHF crosses, all executed trades would be amended, which might result in a worse execution rate than was originally confirmed to him.

Suggested articles

TrioMarkets Partners with HokoCloud, Expands its Portfolio with Social TradingGo to article >>

Around 9pm that day, SCML revisited the client’s trades and amended the closing price to 0.9625. This meant that his account entered a negative balance of £739,140, which represented a sum owed to the firm.

Statement from Steen Blaafalk, Chief Financial and Risk Officer at Saxo Bank

It was regrettable that the removal of the peg of the Swiss franc versus the euro back in January 2015 led to significant losses for many investors. It was a historically big move in a major currency and January 15 2015 was not a good day for a number of our clients and hence not a good day for Saxo Bank. But it is important for us to emphasize that we have followed standard practice for extreme market situations like the one in January 2015 ensuring clients as objective prices as possible.

We have noted the Financial Ombudsman Service’s decision and will of course follow its decision. Saxo Capital Markets UK, is seeking further explanations and guidance from FOS on the details of the decision and how this impacts other cases and clients.

That said, Saxo Bank has seen multiple positive rulings and conclusions on the matter in favor of Saxo Bank from other courts and authorities:

1) In July 2015, the Danish FSA conducted a thorough investigation of Saxo Bank’s handling of the CHF incident and the overall conclusion was that the method applied by Saxo Bank contributed to an equal treatment of clients and was not biased towards the interests of Saxo Bank and thus in accordance with regulation on investor protection.

2) In November 2016, the Danish Maritime and Commercial High Court ruled in Saxo Bank’s favor also underlining that Saxo Bank’s actions were in line with the bank’s business terms. And that market conditions were exceptional, that market was illiquid and that it, in practice, was impossible to execute orders at the initial prices.

3) Most recently, the Danish Complaint Board of Banking Services concluded in Saxo Bank’s favor saying that Saxo Bank had acted in a way that was fair and correct, and in accordance with the bank’s general terms of business. And further concluding that the corrected prices contributed to reach the, under the circumstances, best results for clients.


Got a news tip? Let Us Know