Best prime-of-prime broker and best retail FX platform – Saxo Bank

Despite temperamental market activity and the more restrictive regulatory regime some parts of the world have faced over the past few years, the retail trading space nonetheless remains vibrant. 

Established brokers such as Saxo Bank continue to sign up new clients in droves, many of which are coming onboard looking to trade the more than 40,000 financial instruments Saxo offers in a bid to expand their trading to multiple asset classes beyond foreign exchange.

But this past year, however, an entirely new type of client base that had been hitherto relegated to specialised investing firms has made its way to Saxo Bank’s doors.

In the past 12 months the bank has seen a spike in the number of investors looking to gain access to financial markets through the bank’s platform. These investors are moving into cash long-only type of products rather than contracts for differences (CFDs), foreign exchange or commodities, explains Peter Plester, head of FX prime brokerage (PoP) at Saxo Bank. They are very much looking to buy and hold rather than trade short-term on margin.

For many parts of the world this rise of the investor class is a rather new phenomenon, unlike the US where many people are well versed with the ins and outs of stock market investing. 

“In America, investing is very normal and widespread,” says Plester. “Many people have an investment account and know exactly what their 401k pension accounts are worth because they actively trade them. In Europe and the rest of the world, that’s not so much the case. It’s very normal for people to have a pension account somewhere and the maximum interaction they have with their long-term investments is the statement they get once a year.”

A lot more people outside the US are now micro-managing their investments or pension pots, Plester points out. He wagers that because many office staff were obliged to work from home throughout much of the pandemic they not only had time spare to research the merits of various stocks, but had spare funds to invest that would otherwise have gone towards commuting to work or engaging in social activities.

Plester highlights that this increase in the consumption of investment products comes not only from new clients seeking direct access to Saxo’s wide array of instruments, but a substantial portion also stem from some of Saxo’s PoP clients who extend the bank’s product range to its own clients.       

“A lot of downstream brokers or investment manager clients are seeing their client base becoming a lot more engaged in the markets and that’s being pushed up to us at the top of the tree,” Plester says. “We’re seeing a lot more interest from our biggest clients to offer cash products to their more investor-type end-clients.”

The acquisition of online investment broker BinckBank in late 2019 was a strategic move for Saxo Bank. On the one hand it enabled it to broaden its product offering and client base, and on the other it substantially bolstered the bank’s balance sheet thus allowing it to service  even larger clients than it had up to now.

“In the past year or so, we’ve onboarded new PoP clients who are looking to take advantage of the fact that we’re one of the few places where they can actually get proper market access, execution and custody for all these cash products,”
highlights Plester.

While Saxo Bank has been actively expanding its cash offering, it certainly hasn’t forgotten its long-standing trading client base. As such, in the past year the broker added new products in its traditional margin trading sphere, not only through the introduction of FX swaps for more than 130 currency pairs, including gold and silver, and rolled out its cryptocurrency offering.

While not strictly new to Saxo’s platform, the cryptocurrencies on offer were limited to exchange-traded products as the broker resisted extending this to a wider range of products due to security concerns.

“We’ve offered exchange-traded cryptocurrencies for a couple of years, but these were regulated products on regulated exchanges as we wanted to make sure
these products were safe to trade,”
explains Plester. 

“Regulators around the world are now becoming more accepting of cryptocurrencies and their security is somewhat safer because they are more regulated. There’s obviously a lot of interest in the market and we’re now able to offer access to cryptos in quite competitive ways.” 

Despite this widespread acceptance of cryptocurrencies across retail clients and mainstream financial institutions, Saxo nevertheless remains cautious. Its initial offering is limited to just three cryptocurrencies – namely bitcoin, ethereum, and litecoin – against the dollar, euro and Japanese yen.

While the broker is keen to enhance its offering in the future, it is carefully monitoring the state of the market and paying special attention to the restrictions imposed by regulators around the globe as to who can trade these products and under what conditions.

More products, increased sophistication

As Saxo Bank continues to increase its product range of investment and trading instruments, its client base is becoming ever more sophisticated in its workflow requirements. To this end in the past year, Saxo added new features to its professional trading platform, SaxoTraderPRO, to help its clients become more efficient in their trading.

“We continue to attract some of the more sophisticated clients out there, particularly those more advanced traders that were gearing their portfolio for the volatility we experienced in March 2020 who were looking to hedge their positions and their portfolio and deploy different trading strategies,” says Henrik Dyrholm Holst, head of trading platforms at Saxo Bank.

To cater to this client base Saxo Bank rolled out a number of sophisticated tools to help them manage their market risk and portfolio during volatile times. As such, Saxo unveiled custom margin alerts that can be triggered should the value of their account reach a certain level and provide them the ability to close all their positions in a single asset class via one single click in order to respond quickly to a change in market conditions. Likewise, conditional orders now allow FX traders to set for an order to trigger automatically should a certain price event occur for a certain product.

At the same time, Saxo bolstered its research functions to provide a more comprehensive view of third-party industry news and Saxo’s own proprietary research, technical analysis and trade signals.

New types of notifications were also made available to allow clients to receive curated push messages on their phone with the latest market information, research or analysis based on their trading needs.

“As traders were looking for answers during volatile times, we proactively would update them on noteworthy market events,” Holst explains. “This proved helpful to our clients during those times because they knew if something were to come up in the markets we would quickly tell them about it.”

The use of such mobile services have gained traction in recent years, not only to access research and analysis but also to initiate trades. The use of these services does depend on the time of year and market conditions, but since tools, settings and trades are automatically carried over between all of Saxo’s trading platforms and devices, the use of mobile phones is steadily going up.

Saxo Bank was voted best prime-of-prime broker and best retail FX platform at the 2021 FX Markets e-FX awards.  

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