One to one with Saxo Bank’s Adam Reynolds on the company’s establishment in mainland China

Saxo Bank recently expanded its presence in the Asia Pacific region, making the remarkable step of heading to mainland China with its new office in Shanghai.

With Adam Reynolds, CEO for Asia Pacific at Saxo Bank, having extensive experience in operating at the top level in the most prominent region in the world for retail FX, FinanceFeeds discussed the firm’s inaugural step onto the mainland, and the differential between its established operations in the institutional center of Singapore and China itself.

Yesterday, Saxo Bank’s open API went live, allowing users, white label partners and financial institutions to develop and operate their own applications on Saxo Bank’s infrastructure, a facet that is sure to be attractive to China’s technologically astute and ambitious traders.

With over 30 years of experience in the institutional FX industry, largely centered around the APAC region, how do you envisage the growth of retail FX alongsie the established interbank sector in Hong Kong and China in years to come?

I think that the retail FX market will continue to grow in the region, but the biggest key for rapidly accelerating growth will be further capital account liberalization in China. If Margin FX trading becomes an available product in the Shanghai Free Trade Zone and is thus regulated, there will be a massive increase in participation from investors who want to access this market. This will also bring a lot more protections to Chinese mainland investors. Overall the retail FX industry has grown even as the institutional FX industry has moved sideways, or in some cases shrunk. So this very healthy dynamic we think is set to continue.

What was the transition from being a senior trader at large institutions including UBS, Citibank, HSBC and Societe General in Australia to operating as a senior executive in an electronic trading firm in Singapore like?

It is a very different dynamic, and really much more exciting. Being a senior trader in FX is about being totally focussed on one currency pair in one market a lot of the time. My current role is much broader and obviously involves multiple asset classes and geographies. I remain firmly involved in the markets, but the tech side is also hugely challenging and interesting. Saxo is a true FinTech company with around ½ of the rims employees being on the Tech side of the business. This makes it hugely exciting as we develop a product which is unparalleled globally.

What is Saxo Bank’s ethos for the Asia Pacific region, and how does its presence and value proposition including technology, pricing and execution differ from that of other western firms with presence there such as IG Group?

Saxo has a one account multi asset trading platform with a huge selection of instruments for clients to invest and trade in. These instruments are across Equities, FX, Commodities and Fixed Income asset classes with Spot, NDFs, CFDs, Futures and Options all being available to our clients. None of our competitors have such a broad offering and so we attract the professional and semi-professional traders who understand markets and how they work.

Additionally we have a rapidly growing institutional business with asset managers, wealth manager, family offices and other banks and brokers. Our ethos is to provide the best user experience to our clients and allow individuals access to the markets that is more cost efficient than going through a private or commercial bank. Our pricing is very competitive and we will continue to work hard to ensure we remain very competitive relative to our peers.

What type of business model do the majority of Saxo Bank’s client base in Asia operate? Are they corporate clients with a liquidity relationship with Saxo Bank, or are they retail end users who understand the benefits of the open API SaxoTraderGo platform and security of a bank with its own proprietary technology?

Our clients are a mix of individuals and institutions. Typically high net worth individuals and family offices that may run other businesses and trade with us on their personal accounts. We also have a compelling offering for employees of banks and brokers that includes reporting functionality back to their compliance departments as required under the regulations. A significant number of our individuals fit into these categories.

On the institutional side, hedge funds of all sizes, wealth managers, banks and other brokers are all clients of ours, and we are seeing the most rapid growth in the hedge fund space. Saxo offers a Technology Driven Prime Brokerage model which is extremely cost efficient at any scale. As the traditional prime brokers continue to restrict their offering to the very large hedge funds and offboard small and medium managers, we are seeing a huge increase in this side of our business.

Do you think Shanghai is the next Hong Kong and Singapore as China has more control over the mainland, and firms are heading to Shanghai to establish?

I think Shanghai will be the dominant financial centre in Asia once the full opening up of the capital account is completed. However, that may be some time away as the pace of opening up has slowed recently with the volatility in the A-share market.

What is Saxo Bank’s technological initiative for the Far East?

Our biggest technological initiative is the launch of the Open API that we announced yesterday at our institutional conference in Singapore.