Saxo Bank ordered to provide accurate reporting amid deficiencies since 2018

Rick Steves

The shortcomings include errors in information that are significant for both the Danish FSA’s and other European supervisory authorities’ ability to carry out market surveillance and correctly identify specific market participants, the regulator said.

The Danish Financial Supervsory Authority has ordered Saxo Bank A / S to implement measures that ensure complete and accurate information in reports of transactions, the regulator announced.

The country’s FSA – Finanstilsynet – has stated that Saxo Bank has issued incomplete transaction reports. As a bank, it is obliged to report complete and accurate information on transactions with financial instruments to the competent authority as soon as possible and no later than at the end of the following working day.

“Since the beginning of 2018, Saxo Bank A / S’s reports of transactions have been associated with a number of deficiencies. The shortcomings include errors in information that are significant for both the Danish FSA’s and other European supervisory authorities’ ability to carry out market surveillance and correctly identify specific market participants”, the regulator said.

Reporting transaction information is an essential element in monitoring whether there is market abuse in the capital markets. Significant deficiencies in the transaction reports may therefore mean that market abuses are not detected by the relevant authorities, which risks weakening confidence in the markets.

Steen Blaafalk, Group Financial & Risk Officer, has the following comment on the Danish Financial Supervisory Authority’s order:

“We found some inaccuracies in several of the transaction reports that we as a bank make on a daily basis to relevant authorities every time our clients trade in financial instruments.

We informed the Danish Financial Supervisory Authority and initiated an investigation of our reporting systems and procedures to clarify the reasons behind the erroneous reporting.

We of course take note of the order and have after dialogue with the Danish Financial Supervisory Authority launched the necessary initiatives that ensure that the specific order is complied with within the deadline set by the Danish Financial Supervisory Authority.”

Saxo Bank has recently reported 400% growth in client deposits since Geely took over the company. The key driver behind it is likely to be its business expansion in China arranged by Geely.

In the last three years, the 28-year old trading company has seen deposits growing from DKK 100 billion to the current figure, up by 400%.

Saxo established a China office in the Shanghai Free-Trade Zone in September 2015 and has since then signed extensive financial technology partnerships as part of its Greater China strategy. Geely International Hong Kong, a subsidiary of Geely Group, became a shareholder in Saxo in 2017 after acquiring a 25.71% stake and, one year later, the Chinese multinational took over after agreeing to hold 52% of the trading company.

Geely’s acquisition of Saxo Bank came amid a complete role-reversal that took place in China which created a massive opportunity for multi-asset FX brokers. The new law against regional exchanges opened the door to retail FX as companies look toward OTC electronic trading via international liquidity providers in order to retain their existing audience and branch out, whilst protecting themselves against closure.

This would mean the opening of prime brokerage accounts with global providers and using platforms hosted in mainland China, but developed and owned by global companies, in order to connect an existing Chinese client base to Chinese and international asset classes. Saxo Bank is in a prominent position to provide the needed liquidity to the Chinese OTC market, especially since being acquired by Geely. This just might be the key driver to Saxo Bank’s growth in recent years.

In March, Kari Stadigh, former Group CEO and President of Sampo plc., was elected by the shareholders as the new Chairman of the Board of Saxo Bank. Mr. Stadigh replaced Daniel Donghui Li, CEO of Zhejiang Geely Holding Group, who will continue as a regular member of the Board.

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