Saxo Bank welcomes ESMA’s proposals and supports consistent EU-wide regulation on the provision of CFDs to retail clients
Saxo Bank, the global multi-asset trading and investment specialist, welcomes ESMA’s latest update on its preparatory work in relation to the provision of CFDs to retail clients. The update, which was issued on Friday, 15 December and envisages a brief period of consultation in January 2018, paves the way for a more level playing field among EU providers offering CFDs to clients, avoiding an arms race on leverage.
Commenting on ESMA’s proposals, Kim Fournais, co-founder and CEO, Saxo Bank, said: “Saxo strongly welcomes and supports the proposals set forth by ESMA and believes that consistent, harmonised regulation at a European level will be positive for clients and the industry as a whole. At Saxo, we have been expecting these developments for some time and have provisions in place. We made a clear strategic decision not to compete on high leverage, placing us in a good position to maintain and grow our business in this new regulatory environment.”
Saxo believes that trading with CFDs and FX instruments has its advantages for traders looking hedge their global market exposure in a flexible and efficient way. However, with too high leverage, the risks of trading these products can outweigh the benefits.
“It is important to note that this is a leverage problem – not a product problem. Responsible caps on leverage are therefore key to consumer protection. Our approach and business model clearly show that running a profitable business and being a responsible market participant are not mutually exclusive. For its long-term survival, the industry should welcome the move away from competition on leverage and embrace competition on quality of platform, price, product and service,” added Fournais.
ESMA’s latest proposals signal a need for better alignment between leverage levels and market conditions. Saxo takes a dynamic approach to leverage, adapting margins to volatility, market capitalization when trading stocks and available liquidity in the market. It believes that offering very high leverage which is out of sync with underlying market conditions at any given time is irresponsible.
Earlier this year Saxo Bank Saxo Bank signed up to the FX Global Code of Conduct, published and Enhanced Disclosure and announced the decision to withdraw from the UK CFD and Association. Saxo Bank aims to continuously be at the forefront of driving transparency, integrity and trust in the sector.
Saxo Bank Group (Saxo) is a leading Fintech specialist focused on multi-asset trading and investment and delivering ‘Banking-as-a-Service’ to wholesale clients.
For 25 years, Saxo’s mission has been to democratize investment and trading, enabling clients by facilitating their seamless access to global capital markets through technology and expertise.
As a fully licensed and regulated bank, Saxo enables its direct clients to trade multiple asset classes across global financial markets from one single margin account and across multiple devices. Additionally, Saxo provides wholesale institutional clients such as banks and brokers with multi-asset execution, prime brokerage services and trading technology, supporting the full value chain delivering Banking-as-a-Service (BaaS).
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 launching its first online trading platform in 1998, Saxo Bank was a Fintech even before the term was created. Headquartered in Copenhagen Saxo today employs more than 1500 people in financial centers around the world including London, Paris, Zurich, Dubai, Singapore, Shanghai, Hong Kong and Tokyo.