Unlocking global capital markets – then and now
Co-Founder & CEO of Saxo Bank
In 1992, we founded the small brokerage that was to become Saxo Bank. Back then there was no real price information for non-banks, and most investors placed trades at their bank over the phone with no real way of knowing if they were quoted a fair price - which they seldom were. You had to be a very large customer to receive any kind of personalised and qualified service and we saw a huge opportunity in delivering better investment opportunities and services to investors and traders.
We became familiar with the internet at an early stage, and the road to truly deliver on our vision became clear: by using technology, we would be able to give a wide range of clients better investment opportunities, better platforms, better services, more transparency, and much sharper prices.
From the outset we have worked to close the gap between the investment opportunities available to large financial institutions on Wall Street and the opportunities for the people on Main Street.
Why Saxo Bank makes a difference
It is crucial for all of us that our savings are invested with a proper risk profile, prudent diversification, and at a low cost. The world is increasingly globalised and while we consume goods from all corners of the planet, our investments often remain local. That carries risks and often hurts returns in the long run. That is basically the problem we are trying to solve by ensuring that opportunities in global markets are accessible to everyone – not just large financial institutions.
What really sets our offering apart from the rest of the industry is that you are able to trade any macro cycle in the economy on our platforms. A typical bank will offer only limited investment opportunities - for example, focusing on stocks, bonds, or mutual funds in your local market and charging overly high fees. We also offer all your local markets, but at the same time we offer the whole world of global capital markets at your fingertips. We will often be able to offer you better and cheaper investment opportunities in foreign markets than your local bank offers in your local markets. Even in most local markets, we are very competitive with the best.
Too-high costs over a longer period will cost more than most people imagine: looking at managed investments in pensions for example, the Danish consumer council has calculated that one percentage point higher in yearly cost means that you will have postpone your pension by four years. One percentage point of costs might seem abstract, but it leads to a very concrete four years of lost retirement – four years of our lives where we could have the freedom to enjoy and fulfill our dreams.
I expect only very few people dream about allowing the bank or broker to make that money, but previously there has been no viable alternative.
This is really the driver behind Saxo Bank: The opportunity to take control of one’s financial destiny should not be confined to the few. Everyone should have the freedom to control their investments and plan their savings to support their goals. We are passionate to deliver our renowned SaxoExperience and constantly improve it. We want to create win-win situations for our clients and partners.
We launched our first trading platform in 1998. The platform was a pure FX platform but for the first time, traders were given the opportunity to trade with live-streamed prices. This was the cheapest and most transparent foreign exchange offering that non-banks had ever seen. Over the years, we have added more and more asset classes to our investment universe: equities, bonds, commodities, ETFs, mutual funds, futures, options, CFDs etc. Our guiding principle has been the same: we have looked at what opportunities and services were available to large financial institutions and used technology to perfect and scale the solutions and make them accessible to a wider audience.
That is really what we mean when we say that Saxo Bank democratises trading and investment.
Many probably think that the era of phone trading and lack of transparency is long gone. After all, you can hardly open a newspaper without reading about new fintech start-ups and the heavy technology investments made by incumbent banks. But for all the talk, there is still a very long way to go before we have a true level playing field in financial markets.
Bond markets are one example were there has been notoriously slow adaptation of electronification. This is of course partly due to vested interests (there is a lot of money to be made in inefficient and fragmented markets), but also partly due to the difficulties in making bond trading electronic. Truly digitising corporate and government bond markets requires cutting-edge technology – and a honest wish to offer clients better services and prices.
While large institutional investors have long had access to digital trading in liquid government and corporate bonds, electronic bond trading has not been available to a large part of the investor base. Today, most bond investors have to rely on voice trading to buy and sell bonds based on indicative prices in an opaque market, often trading with one bank’s own book. You may see a digital front-end when you buy or sell bonds online with your bank, but it is very likely that the trading behind the scenes is done over the phone – just like FX when we launched our first platform in 1998.
True to our vision, we have launched the first electronic bond trading solution with a full digital value chain. Our robot seeks out the best price from up to 40 global bonds providers, meaning that clients get the best price available from some of the largest global banks and liquidity providers.
Investors need to ask themselves if they want to continue to trade based on an indicative price from a single bank or if they want to get the best price available from up to 40 liquidity providers, including some of the largest global banks.
We know that the majority of investors prefer guidance when they invest and they will most likely prefer some kind of managed solution. Investing in funds with diversification can be a wise choice for people without the time or urge to pick stocks or other investments for their own portfolios. The problem is that most managed investment solutions presented to average investors by their banks are often too expensive or underperforming – and all too often both. Again, digital solutions can help with better alternatives.
Rather than building our own funds and offer those to clients, and collect the fees, like most banks do, we have stayed true to our vision and looked outside of Saxo Bank to find the best products from the best providers. With our digital investment solution, SaxoSelect, you can invest through “strategies” based on research from world leading experts such as BlackRock, Morningstar, and Nasdaq. Thanks to the digital solutions, costs are usually more than one percentage point lower than what average banks offer – or four years of retirement! Again, we must ask ourselves who we think will be most successful in guiding our investments: our local bank’s very own investment funds or some of the worlds’ leading experts?
We have come a long way in our mission to democratise investment and trading and today you can invest in all global markets with Saxo Bank in 28 languages and we offer superior platforms, tools, and services to do so. But we are not going to rest on our laurels: there are new frontiers to be broken, old business models to be challenged, and we must spread the word about what we offer and why it is relevant to all investors and traders.
Today, our more than 1,500 Saxonians go to work every day, to ensure that all investors and traders get the broadest access to global capital markets through the best products, platforms, prices, and service.
That's what we call the SaxoExperience.