We speak to Saxo Bank’s Australian CEO on the firm’s continuing multi-asset expansion
“On the Saxo side, we will be the first true multi-asset broker to offer HIN execution and settlement for Australian equities, meeting a known demand in the market place. On the flipside, Open Markets will be taking advantage of Saxo’s market-leading International Equities engine, enabling them to offer International equities to their customer base.” – Ben Smoker, CEO, Saxo Capital Markets Australia
In order to not only keep abreast with technological change and the increasingly varied demands of institutional investors and retain a foothold in the very upper echelons of the electronic trading industry, the resources committed to FinTech development have had to be married with the ability to negotiate partnerships with a series of liquidity providers and specialists in specific asset classes in order to provide a sophisticated multi-asset solution.
The days of simply offering a spot FX product range on a standardized platform to all and sundry are in their twilight period, and genuine multi-asset solutions via retail trading platforms are the order of the day.
Saxo Bank is a pioneer in technology led relationships with clients, whether corporate or retail, and has been expanding its multi-asset product range substantially both before and after the launch of its openAPI-derived SaxoTraderGo platform
Last week, the company’s Antipodean divison, Saxo Capital Markets Australia, entered into a strategic alliance with OpenMarkets to deliver a combined HIN and international equities trading solution to better serve the online broking market.
Today, FinanceFeeds met with Ben Smoker, CEO of Saxo Capital Markets Australia to discuss in detail how this relationship will provide a much needed edge within today’s electronic trading environment.
Saxo Bank has committed itself to a genuine multi-asset solution for quite some time, including institutional relationships with major venues and Tier 1 banks. How will OpenMarkets partnership in Australia, a traditionally high quality equities, stocks and commodities center, fit into the overall remit for Saxo Bank?
The partnership deal struck with Open Markets operates on two fronts. The main theme is that each company has agreed to leverage each other’s respective core strengths to bolster our respective value chains and corresponding offerings to the Australian market place.
On the Saxo side, we will be the first true multi-asset broker to offer HIN execution and settlement for Australian equities, meeting a known demand in the market place. On the flipside, Open Markets will be taking advantage of Saxo’s market-leading International Equities engine, enabling them to offer International equities to their customer base.
China has been a priority for Saxo Bank for a number of years, and the firm is very well established across the majority of large portfolio managers and IB companies across the country. Chinese investors these days want access to overseas stocks and shares, but with the security of having a Holder Identification Number as many investors in the mainland have no means of viewing their services from within China due to internet restrictions.
Is Saxo Bank going to take this product into China on a large scale, and will it be aimed at traditional investors who are used to the Chinese exchanges but disenchanted with the narrow, government-backed range of products available?
China is an interesting prospect for Saxo Bank in general. We recently announced that the bank received an offer from Geely International Hong Kong to become a key shareholder in Saxo. This represents an exciting prospect for Saxo in the region and will create an even stronger foundation to participate in opportunities arising in the growing Asian and Chinese markets. From the perspective of Chinee investment in Australian Equities, we remain bullish on potential demand here if the level of interest in the local property market is anything to go by.
Multi-asset diversification is vital in retail electronic trading especially to balance risk for brokerages. How will Saxo Bank’s institutional division position this product to its broker partners in order to enhance their brokerages and become more than spot FX providers?
Many of our wholesale clients (both current and prospective) see HIN execution and settlement as a key augmentation to our existing multi-asset offering. For us it will be one of the final pieces in the jigsaw puzzle, enabling us to have the most complete online broking offering in Australia. Our wholesale business will now be able to focus on fostering partnerships with broker/dealer partners where HIN execution and settlement is a key ingredient to their business model.
Exchange-traded products have been shyed away from by many electronic trading firms for several reasons, main ones being the cost of exchange membership, ongoing clearing costs and the extra layer of latency added by having to process all order flow via a centralized counterparty. Saxo Bank’s fintech orientated approach has brought this to a retail audience.
How does this work and how are the costs and execution times maintained on a par with what the upper level of retail traders would expect?
Saxo’s technology stack and connectivity to the global market place is highly evolved. We have spent a lot of time and resources developing a state-of-the art trading platform that brings together tens of thousands of instruments across multiple exchanges and across a multitude of geographies.
This sort of connectivity doesn’t just happen overnight. However such scale brings a number of efficiencies, not least of which is cost efficiency. What this means is that we are able to bring a global trading platform to retail traders and investors at a low cost and where latency is rarely an issue. This goes to one of our core strategies to democratise access to global markets.