Our parent company, Saxo Bank A/S is a European regulated bank and we meet the regulatory capital requirements according to European Banking Authority and Danish Financial Services Authority. The capital requirements for regulated banks are higher than those of most brokerages who are not regulated as banks.
Saxo Bank (Schweiz) AG is a FINMA regulated bank and security dealer which is equally fulfilling all capital and liquidity requirements after last week’s major CHF correction and respective client stop outs.
A number of Saxo Bank’s customers ended up with insufficient margin collateral to cover their losses on positions in Swiss Franc. Saxo Bank is liaising with these clients to settle such unsecured amounts. It is expected that some customers will not be able to the settle the balance in full and that the bank will incur losses in this respect.
However, even in the unlikely event that Saxo Bank would not be able to recover any of the outstanding amounts, Saxo Bank would still fulfil its regulatory capital requirements.
Part of the reason that we have successfully protected our financial strength is our robust and pre-emptive risk management approach. Having identified the growing risks inherent in CHF trades, we raised margin requirements for CHF in Sep 2014 from 4% to 8%, translating to a leverage change from 25x to 12.5x. This naturally deleveraged our client positions and lowered the financial impact of the CHF move to our client portfolios collectively.
Saxo Bank A/S generally only holds very small, immaterial proprietary positions – including to CHF, and Saxo did not incur any net losses on proprietary trading during this event.
Saxo Bank (Schweiz) AG does not hold any proprietary positions.
Please see the official news releases from our website below regarding:
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