Saxo Bank fulfils its regulatory capital requirements
In light of the recent volatile Swiss Franc currency movements, we would like to inform you that Saxo Bank and its subsidiaries are well positioned financially to conduct our on-going businesses globally.
Saxo Bank A/S is a European regulated bank and we meet the regulatory capital requirements according to European Banking Authority and Danish Financial Services Authority. The capital requirements for regulated banks are higher than those of most brokerages who are not regulated as banks.
A number of Saxo Bank’s customers ended up with insufficient margin collateral to cover their losses on positions in Swiss Franc. Saxo Bank is liaising with these clients to settle such unsecured amounts. It is expected that some customers will not be able to the settle the balance in full and that the bank will incur losses in this respect.
However, even in the unlikely event that Saxo Bank would not be able to recover any of the outstanding amounts, Saxo Bank would still fulfil its regulatory capital requirements.
Part of the reason that we have successfully protected our financial strength is our robust and pre-emptive risk management approach. Having identified the growing risks inherent in CHF trades, we raised margin requirements for CHF in Sep 2014 from 4% to 8%, translating to a leverage change from 25x to 12.5x. This naturally deleveraged our client positions and lowered the financial impact of the CHF move to our client portfolios collectively.
Saxo Bank generally only holds very small, immaterial proprietary positions – including to CHF, and Saxo did not incur any net losses on proprietary trading during this event.
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Saxo Bank Group (Saxo) is a leading multi-asset trading and investment specialist, offering a complete set of trading and investment technologies, tools and strategies.
For almost 25 years, Saxo’s mission has been to enable individuals and institutions by facilitating their access to professional trading and investing through technology and expertise.
As a fully licensed and regulated bank, Saxo enables its private clients to trade multiple asset classes across global financial markets from one single margin account and across multiple devices. Additionally, Saxo provides institutional clients such as banks and brokers with multi-asset execution, prime brokerage services and trading technology.
Saxo’s award winning trading platforms are available in more than 20 languages and form the technology backbone of more than 100 financial institutions worldwide.
Founded in 1992 and headquartered in Copenhagen, Saxo employs more than 1500 people in financial centres around the world including London, Singapore, Paris, Zurich, Dubai and Tokyo.