e-FX Awards - Best Prime of Prime Provider
What have been your biggest successes over the past 12 months?
- We have seen significant client growth over the last year, particularly in the last three to four months, with April seeing over a 230% increase in new clients on the previous year, and there is an extremely strong pipeline of clients as we continue into Q2. Previously, these clients tended to be small to medium-sized institutional clients; however, in the last six months we are now acquiring larger-sized clients partly as a result of Saxo’s enhanced financial strength due to the BinckBank acquisition combined with larger prime brokers turning away some sizable clients due to business model changes. Clients are looking closely at the financial stability of their prime brokers and hence are selecting to work with Saxo as one of the most established and financially stable Prime of Prime providers (PoP) in the market with a banking license and strong balance sheet.
- The addition of bond trading to Saxo’s platform has been particularly popular with our prime of prime clients as they can trade directly in real time with liquidity providers. Furthermore, along with access to government and corporate bonds from the US and Europe, clients can now trade selected high-yield and emerging market paper including LATAM, APAC and MENA in both USD and local currency.
What differentiates you from other firms in this space?
- Saxo's pre-trade risk offering is a particularly important feature for our prime of prime clients, as many large prime brokers are no longer able to service small, medium- and now, even some larger-sized clients, due to capital and liquidity restrictions. Through pre-trade credit risk controls, Saxo can reduce the risk of over-allocation of credit, which can be harmful during market dislocations. Saxo was a leader here as one of the first prime brokers to introduce this capability through firms such as PrimeXM and Market Factory. Furthermore, our pre-trade risk controls for cross-collateralisation across liquidity sources, venues and providers removes the need to carve out credit, so a client can utilise their full net open positions (NOP) with any liquidity provider.
- Saxo’s multi-asset trading capabilities are another differentiator. Clients can access more than 40,000 financial instruments across asset classes including, FX; ETFs; Stocks; Bonds; CFDs; Futures and Options, and soon Mutual Funds, that are cross-margined from a single account. This is the widest range of products from any PoP provider.
- Our ability to create bespoke pools of liquidity from the 30 liquidity providers (LPs), utilizing the LPs which suit our clients best (either on an anonymous or semi-disclosed basis), is an important offering for our prime of prime clients. In addition, Saxo has LPs set up in the three largest data centres (LD4, NY4 and TY3) so there are a wide range of liquidity providers pricing locally in each of the centres (which reduces both response times and the chance of rejects). Dynamic limit allocation between these hubs means that if clients want to trade in more than one location, limits can be optimised across centres in real time.
How has your business/product/service changed over the past 12 months?
- Saxo Bank’s acquisition of BinckBank in October 2019 has been of particular appeal to our prime of prime clients as it has resulted in a higher tier one capital ratio and an even stronger balance sheet for the bank, which is of critical importance when acting as a credit intermediary on behalf of clients. This has meant that we are now onboarding larger clients than previously which are looking for the financial stability of the largest prime brokers and hence are selecting to work with Saxo as one of the most established Prime of Prime providers in the market with a banking license.
- Furthermore, over the last year we have continued to focus our efforts on onboarding and housing the growth of new liquidity providers, particularly non-bank market makers. In fact, over the past year, Saxo has further broadened the range of market access available. As such, clients are now able to gain access to diverse pre-aggregated bank and non-bank liquidity from over 30 providers (an additional five since 2019). This allows Saxo to work with our clients and create very bespoke liquidity arrangements utilizing the liquidity providers which suit them best (either on an anonymous or semi-disclosed basis). Saxo also offers access to the largest FX ECNs, resulting in the widest choice liquidity across venues and LPs in multiple centres.