Saxo Bank License

Financial License

Saxo Bank A/S (Saxo) is the parent company of the Saxo Group and is under supervision by the Danish Financial Supervisory Authority (the Danish FSA). Saxo received its banking license in 2001 and is a licensed credit institution, which is the only license which allows a financial company in Denmark to receive deposits from the general public.

Saxo Group further holds a banking license in Switzerland, and financial licenses in the United Kingdom, Singapore, Hong Kong, Australia, Italy and Japan and is subject to supervision by local authorities in each of those jurisdictions.

License Details: Saxo Bank A/S, company registration no. 15731249, license no. 1149. Danish Financial Supervisory Authority (the Danish FSA), Strandgade 29, 1401 København K.

Link: Danish Financial Supervisory Authority (the Danish FSA)
Link: List of financial licenses of the Group

Saxo is Classified as Systemically Important Financial Institution 

In June 2023 Saxo was classified as a Systemically Important Financial Institution (SIFI), a classification which is only given to systemically important banks, which are “too big to fail”. In Denmark, only five other major banks and three mortgage institutions hold/retain this classification. SIFIs are subject to significantly higher capital requirements, including a so-called SIFI-buffer and a higher requirement for liabilities which can be used for recapitalization purposes, ensuring that Saxo can continue its operations in the event of a crisis ideally without losses being attributed to the bank’s depositors and unsecured creditors. SIFIs are under more rigorous scrutiny by regulators and face increased demands on a range of other areas such as increased reporting and disclosure requirements, intensified supervision by regulators as well as stricter requirements for members of the board of directors, the board of management and key staff.

You can find the SIFI-report from the Danish FSA here.

Depositor and Investor Guarantee Scheme 

Saxo is a member of the Danish Depositor and Investor Guarantee Scheme (DGS). Under the DGS, the Danish Guarantee Fund covers depositors’ registered cash deposits up to an amount equivalent to EUR 100,000 per depositor in case Saxo becomes subject to resolution proceedings or bankruptcy proceedings.

Saxo has a regulatory obligation to protect its client assets and, as a general rule, client financial instruments, such as stocks and bonds, will therefore be returned to clients in the event Saxo becomes subject to resolution proceedings or bankruptcy proceedings. Nevertheless, if Saxo fails to return financial instruments belonging to investors in a resolution or bankruptcy scenario, the Guarantee Fund will cover losses suffered by an investor up to the equivalent of EUR 20,000. An investor will, however, only receive coverage up to an amount equalling the value of the financial instruments which could not be returned to the investor by Saxo.

The DGS is administered by Finansiel Stabilitet which is an independent public company owned by the Danish state through the Danish Ministry of Industry, Business and Financial Affairs. Financial companies in Denmark such as credit institutions, investment firms and branches of non-EU based credit institutions are required by law to participate in - and pay contributions to - the DGS.

The DGS covers deposits from all clients excluding deposits from certain financial companies such as financial institutions, insurance companies and pension funds.

See further information on the Deposit Guarantee Scheme here: https://www.fs.dk/finansiel-stabilitet-at-a-glance/danish-guarantee-fund

About Publicly Available Reports from the Danish FSA

Supervisory practises vary across national borders even within the EU. The Danish FSA conducts on-site inspections of all regulated banks in Denmark on a regular basis depending on the size and risk profile of the institution. Reports from these inspections are required to be published by all institutions on their webpage following inspections. For SIFIs, theme-based inspections are performed regularly, and inspections occur more frequently than for smaller institutions.

Saxo is Subject to Pan-European & National Regulation 

The EU’s regulatory requirements on the financial area implement the Basel Committee on Banking Supervision (BCBS) standards for international banking regulation. The BCBS is a cooperation of central banks and supervisory authorities from 28 countries. The standards developed by the committee are known as the Basel III framework (current version), however, these standards are not directly applicable as regulation in Basel member states. This means that while the BCBS does not possess supranational authority, and its decisions do not have legal force, the BCBS relies on its members' commitments to implement the BCBS standards as applicable legislation.

In the EU, the BCBS standards therefore form the backbone of the EU’s Capital Requirement Regulation (CRR) and Capital Requirement Directive (CRD), which are now in their third and sixth versions respectively, with CRR3 applying from 1 January 2025 and CRD6 which is expected to be implemented in 2025 in Denmark. The CRR is a binding EU regulation, which applies directly in all EU Member States, including Denmark, whereas the CRD is implemented into national regulation in Denmark primarily through the Danish Financial Business Act and the Executive Order on Management and Control of Banks. For EU-member states it is therefore the EU Commission which drafts legislative proposals on the financial area based on BCBS standards.

In addition to regulation on capital requirements, regulated financial institutions such as banks face regulation on a range of areas:

Governance Requirements

The overall governance requirements for banks in Denmark are included in the Danish Companies Act and in the Danish Financial Business Act. Further regulation exists on a national level in a number of executive orders which have their legal basis in the above-mentioned acts. These, together with guidelines from the European Banking Authority (EBA) on an EU level, set out the requirements in terms of the responsibility of the board of directors and the board of management to ensure the proper functioning of Danish banks.

Under Danish company law and financial business law, the general assembly is the highest authority for limited companies, and it is the general assembly which elects the board of directors which again is responsible for appointing the board of management. In the two-tier management system, under which Danish banks operate, responsibility is divided between the board of directors and the board of management:

The board of directors decides the business model, overall organisation and structure as well as the strategic management of the company, including policies, risk profile and risk strategy. Furthermore, the board of directors supervises the board of management. It is also the board of directors which is responsible for delegating responsibilities to the board of management concerning the daily management of the company.

The board of management is tasked with the daily management of the company. Further responsibilities include implementing policies and guidelines decided by the board of directors in the running of the bank as well as reporting to the board of directors on relevant matters. Over the years, the governance requirements for banks in Denmark and in the EU have been tightened with the purpose of improving the governance structure of institutions and to enhance the supervisory role of the board of directors with the board of management.

Mandatory Committees 

SIFIs are required to maintain a board risk committee, an audit committee, a remuneration committee and a nomination committee. 

The board risk committee is responsible for monitoring the risks of the company. The committee shall be composed of members of the board of directors with adequate competencies to monitor the risk profile of the institution. The board risk committee shall advice the board of directors on risk matters and oversee that the risk strategy is implemented correctly, and that products and services are in alignment with the business model and risk profile of the company. The board risk committee shall also assess whether the remuneration structure is appropriate compared to the capital and liquidity situation of the company.

The audit committee is required according to the Danish audit law and shall be composed of members of the board of directors or members elected by the general assembly. The audit committee shall inform the board of directors about the results of the audit of the company and monitor the accounting process and the internal control system.

The remuneration committee: SIFIs are required to maintain a remuneration committee which shall consist of members of the board of directors. The remuneration committee shall oversee the remuneration policy and remuneration practice of the institution under the risk profile and capital situation of the institution. The remuneration committee shall furthermore give advice to the board of directors on the company’s remuneration policy and assist in monitoring that the remuneration policy is adhered to in the institution.

The nomination committee: SIFIs are required to maintain a nomination committee which shall consist of members of the board of directors. The nomination committee shall propose candidates to the board of directors and evaluate professional competencies of the board of directors to ensure that the structure, composition and qualifications of the board are adequate.

Control Framework

Banks including SIFI banks are required to have independent internal control functions in terms of a risk management function and a compliance function. These two independent control functions are also referred to as the second line of defence with the first line of defence being business units and the third line the internal audit function.

The risk management function in second line is responsible for ensuring that all risks are identified, monitored, reported and managed in the company. The compliance function is tasked with ensuring that the institution has efficient procedures for being in compliance with the combined regulation.

Fit & Proper Rules

For SIFI-institutions, members of the board of management, members of the board of directors as well as certain key staff are required to be assessed fit and proper subject to approval by the Danish FSA. A fit and proper assessment, requires adequate qualifications, knowledge and experience. Furthermore, said persons must be reputable and display decency, integrity and independence in performing their duties. The Fit & Proper requirements shall be met before taking up responsibility as member of the board of directors, the board of management or as key staff and the requirements apply throughout employment. For the board of directors, qualification requirements (as expressed under the Fit & Proper rules) apply to the individual members as well as collectively to the board. This means that the individual members of the board must meet the qualification requirements, but the combined board shall also meet collective qualification requirements on relevant areas including but not limited to accounting, credit risk, IT and financial regulation.

Bank Confidentiality

The Danish Financial Business Act decides that the relationship between the client and the bank is confidential. This means the members of the board of directors, members of the board of management and other employees are subject to confidentiality rules requiring them not to pass on client information unjustifiably. Confidential information means any information which is not publicly available including information on client identity, accounts etc.

Data Protection Laws

Saxo is subject to the EU General Data Protection Regulation (the GDPR) which sets out the rules under which Saxo can process clients’ personal information.

Under the GDPR, Saxo is generally obligated to ensure that clients’ personal information is adequately protected and that any handling or processing of such personal information is performed in a transparent way and for legitimate purposes only.

The Saxo Group is required to have a data protection officer whose responsibility it is to ensure that Saxo and the Saxo Group adhere to the GDPR ruleset.

Whistleblowing

Saxo is required to maintain a whistleblowing arrangement which is to operate independently of the bank’s management. Any employee can anonymously report incidents such as violations of financial regulation. See further: https://www.home.saxo/legal/whistleblowing/whistleblowingsystem

Consumer Protection

Banks are required to operate in accordance with honest business principles and good practice within their field of activity. The further content of good practice is decided in a number of executive orders and guidelines. The basic principle is that banks are required to act in a decent and loyal fashion towards clients. Furthermore, rules on marketing practice require banks to adhere to fair commercial practices.

Investment Services and Advice

Subject to Danish implementation of the EU Markets in Financial Instruments Directive (MiFID) the transposed directive applies to Saxo. MiFID requires institutions to act honestly, fairly and professionally in accordance with the best interests of clients. When providing investment advice to or portfolio management for clients, the institution shall obtain the necessary information regarding the client’s knowledge and experience in the investment field relevant to the specific type of product or service, the client’s financial situation including ability to bear losses, and the investment objectives including risk tolerance of the client so as to enable the firm to recommend to the client investment services and financial instruments that are suitable for the client and, in particular, are in accordance with the risk tolerance and ability to bear losses. Generally, higher investment protection rules are secured under the regulation for retail clients, which can be physical persons and minor businesses, compared to eligible counterparts and professional clients. Eligible counterparties are mostly other financial institutions. A professional client is a client who possesses the experience, knowledge, and expertise to make own investment decisions and properly assess incurred risks related to the investment decision.

Best Execution

Saxo is required to execute client orders according to the best execution principle following which firms must take all sufficient steps to achieve the most advantageous transaction in terms of price and the lowest total explicit and implicit costs to investors when placing or transmitting orders in the market. Saxo’s Order Execution Summary is available here:
https://www.home.saxo/-/media/documents/business-terms-and-policies/order-execution-summary.pdf?revision=d470ad95-426c-45a5-bab1-823071de14be

See Saxo’s dedicated MiFID-page here:
https://www.home.saxo/legal/mifid/market-in-financial-instruments-directive

Anti Money Laundering (AML) and Counter Terrorism Financing (CTF)

Danish AML & CTF legislation is based on EU’s Anti Money Laundering Directive which is now being finalised in its sixth version (AMLD6). The purpose of the rules is to combat crime and terrorism by limiting how the financial system can be used for money laundering and terrorist financing, and to enhance the possibilities for authorities to conduct investigations of crime and terrorism. The Danish rules furthermore ensure that Denmark’s commitments under the United Nations Security Council’s resolution on combatting terrorism are fulfilled. Denmark is a member of the Financial Action Task Force (FATF) which is committed to fighting money laundering and terrorist financing. FATF issues recommendations and guidelines on the area of AML and CTF and monitors AML and CTF compliance and designates high risk AML and CTF countries, where financial transactions are considered especially at risk of constituting money laundering or terrorist financing. In terms of the environment for financial crime and terrorist financing, Denmark ranks as the country with one of the lowest levels of perceived corruption in the world according to the Corruption Perceptions Index, which is drafted by Transparency International.

Under EU and Danish AML legislation it is a requirement for banks to know the client (know-your-client principle or KYC). KYC is ensured via proper documentation of the client relationship. This includes that banks are required to obtain adequate documentation on the identification of clients and to have adequate policies and procedures in place to ensure proper identification of such clients. Furthermore, Banks are obligated to monitor for suspicious transactions and to report any such suspicious transactions to the authorities. Also under AML legislation, banks are required to identify so-called Politically Exposed Persons (PEPs) which can be individuals who are especially at risk of being associated with money laundering or terrorist financing.

Legal Entity Identifier (LEI) 

Saxo Bank

Saxo Capital Markets

Member Information Table (GIIN)