Saxo Bank has signed up to the FX Global Code of Conduct, which is aimed at improving industry standards and promoting best practice among FX market participants.
To emphasise its support for openness and transparency, Saxo says it has published an “Enhanced Disclosure” that provides insight into broker incentive, broker stability, client leverage and performance.
The Enhanced Disclosure carries information regarding the
firm’s incentives, stability and client leverage and performance. In it Saxo
says that it hedges an average 97.7% of FX client exposure (in notional terms) –
meaning that percentage is either internalised or hedged externally with other
market participants. A lower percentage of hedging pushes a firm deeper into “B
book” territory where it may trade against the client and, by association, not
have the client’s best interests at heart.
The Disclosure, which runs to 10 pages, also explicitly
states Saxo’s revenues, assets under management as well as reiterating the firm
does not take any proprietary positions or make hedging decisions based upon
client trading behaviour or profitability.
In light of the recent scandal involving FXCM and Effex
Capital, Saxo also states it does not receive any revenue share or incentives
from a hedging counterparty.
Another frequently raised issue among leveraged clients is
forced close outs. In the Disclosure, Saxo states that in the last 12 months it
has forced closed out 0.1% of client trades due to margin requirements not
being met. In the last three months the firm says that percentage remains the
same at 0.1%.
Kim Fournais, CEO and co-founder, says: “We are proud to have been given the opportunity to participate as a member of the Bank of England’s FX Joint Standing Committee in reviewing and drafting this important and unprecedented industry-wide initiative.”
He continues: “We take pride in being at the forefront driving transparency and signing the Code, as well as publishing the Enhanced Disclosure as a proof of the full alignment of interest between Saxo Bank and our clients. It is a means of promoting integrity and trust and is a point of orientation for clients when choosing a facilitator.”
Kurt vom Scheidt, global head of FX, adds: “One of the unique aspects of the Code is the fact that it covers the entire FX industry – sell side firms, buy side firms, trading platforms and venues – and that it is global in nature. This will ensure that standards are consistently applied across the industry, levelling the playing field among segments of market participants and restoring competition based on principles of transparency and integrity.”
In a statement issued today, Saxo stresses that a well-functioning FX market is in the interest of all participants. It adds that the Code sets out the principles and best practices which provide a common set of guidance to the market, including areas where there recently have been degrees of uncertainty about which practices are deemed acceptable.
“While other markets have attempted similar self-regulating initiatives, we have never seen this level of coordination and commitment among market participants. Public adherence to the Code is essential in ensuring that market participants can continue to scrutinise their peers’ practices and therefore ensure that bad practices and market abuse are rooted out. The fact that evolution of the Code was driven by input from a healthy cross-section of market participants makes it well rounded and considered,” comments vom Scheidt.